SDF stands for Signed Distance Function - a function which returns shortest distance between given input point and some surface. Sign of returned value indicates if point is inside, or outside that surface. Complex scenes can be defined in terms of SDFs and calculated using raymarching.
One of nicest properties of SDFs is ease of manipulating shapes with constructive solid geometry (CSG): intersection, union and difference can be represented as simple operations on distances from two surfaces: example of CSG operations with SDF-UI
For more explanation on SDFs visit:
You can read more about process behind making this project on the blog: building SDF-UI.