The "Hi-Lo" card counting system is based on assigning values to cards to track the ratio of high to low cards remaining in the deck. Cards 2-6 are assigned a value of +1, cards 7-9 are neutral (0), and 10s, face cards, and aces are assigned a value of -1. By maintaining a running count as cards are dealt, players can estimate whether the remaining deck is favorable for the player (with more high cards) or the dealer (with more low cards). This helps players adjust their bets and strategy based on the count.