Dynamic difficulty adjustment
Also said as DDA, Adaptive difficulty
The game watches how you are doing and changes its difficulty while you play, usually without telling you. Do badly and it eases off; do well and it pushes harder.
It can hold a far wider range of players in the band that is neither boring nor crushing. The risks: players who notice may feel patronised, and playing badly on purpose can become the best strategy.
Say it
“Track deaths over the last ten minutes. After three deaths in a room, spawn 20% fewer enemies and drop one extra health pack. Raise it again slowly, and never tell the player.”
Where you’ve seen it
Naughty Dog built this into Crash Bandicoot, and Andy Gavin later wrote about it: fail repeatedly and you get extra masks and lives, and even slower boulders, with the aim of helping weak players without changing the game for strong ones. God Hand does it in the open, with a level meter on screen.
Not to be confused with rubber-banding
DDA adjusts the challenge to the player over time. Rubber-banding is a kind of it that specifically keeps racers or rivals close to each other.