The way I understand it, a horizontal dropout looks like a regular rear dropout tilted on its side a little (hence the term "horizontal"). An example of a really horizontal dropout comes to mind as a track bike. These aren't really "dropouts" though. Most horizontal dropouts that I've seen aren't completely horizontal - instead they are just tilted at a good angle compared to normal. Having horizontal dropouts allow for the setting of the correct chain tension when converting to singlespeed.

-Moab