Hydration measures what % of your weight is water. Since water exists in fat cells, muscle cells, blood, etc. you can't use this to sum up body composition to 100%, however it is helpful to know so you can deal with persistent dehydration and see if you have lost a lot of water weight (versus fat mass). Every part of the human body contains fluids. Hydration is the total amount of water and other fluids contained within the bones, muscle, fat, and organs such as the bladder.
Healthy ranges are 45-60% for women and 50-65% for men.