Hypospadius is an abnormality in the development of the penis, associated with failure to complete the tubular fusion of the penile structure. The fusion begins at the perineum and spreads to the distal end, and so the commonest failure occurs at the end of the penis.
The most minimal version of hypospadius relates to the failure of the foreskin to fuse over the ventral glans. Other minimal grades occur when the urethra fails to fuse to the end of the glans with a larger opening of the urethra on the glans - known as a megameatus.
Proximal glanular hypospadius and distal shaft hypospadius don't effect penile function for urination or reproduction, however they may have cosmetic implications.

More proximal hypospadius is a significant abnormality, making intercourse impossible and requiring urination through the perineum.

Other issues often associated with hypospadius include chordee  ( forward bending of the penis ), penile rotation ( very common to a minor degree) scrotal transposition of the penis, where the take off of the penile shaft is closer to the scrotum, and a bifid scrotum.
Hypospadius proximal to the glans is a contraindication to circumcision as the foreskin may be used in the surgical repair.

It is important that significant penile structural abnormalities are referred to a paediatric surgeon with expertise in this field for further evaluation.