In simple terms, 'hygge' (pronounced 'hooga') translates roughly to 'cosiness'. Before going on, this Danish tourism video provides a somewhat idealised introduction to the the concept:
There are, I think, three primary elements to the concept of hygge. One is sharing, the second enjoyment of what you have, the third acceptance. The third is more problematic. Hygge aids coherence, but it can also mean exclusion and acceptance of the status quo. As an aside, perhaps only the Danes can could turn porridge into a cultural experience. Eat you heart out Scotland!
Hygge links, I think, to several elements in Danish culture. One is the defeats and losses associated with Danish history over recent centuries that caused the Danes to turn in, to focus on what they had. A second is what I would call the country aspect of Danish life, life in a small interlinked community placing weight on social harmony. A third, the Danish winter.
By all accounts, the Danish winter is cold and miserable. It encourages cooperative support, as well as social interaction designed to break the pervading gloom. You can understand the desire for cosiness when the world outside is just so bleak! .