An area in a photograph that is 'blown out' is an area that is overexposed. If there is a person indoors standing near a window, if the person is exposed correctly, often the window is overexposed, or 'blown out'. Shiny metals, like chrome on a motorcycle will blow out. The sky will blow out. Instead of having color, it's white. Bright, gleaming white that can shed a glow onto other areas of the photo. It's really distracting and I try to avoid it.
When I first started with photography, I was trained that overexposure was worse than underexposure. When I had something that was dark, the details were still there and I could make it lighter and recapture the details. Something that had gone so bright as to turn white had no details. Hah! That was true only for film. It took a long time to get the folks who wrote digital image manipulation applications to start trying to recover white and almost white areas to get back the details.
There is a feature in CS3 camera Raw, that is called 'Recovery' and it can take an image with blown out areas and make those areas look better.
Here is an area of a photo before I used Recovery.
And here is the photo after I adjusted it using Recovery.
The careful observer will note that there is more detail in the wrinkles to the left side of the photo, but there is also still some degree of overexposure. I wasn't willing to recover to the point where there was no overexposure left at all. The amount I used works when you look at the whole photo. Since I don't have a release, you don't get to see the person.