TDI = Turbo Direct Injection

It is a Diesel engine design that VW has devloped that produced more torque -
power - from a cleaner burning engine.  The piston has - for lack of a better
word - a step cast into it that allows the air/diesel fuel mixture to swirl -
hence, turbo - for more complete combustion.  Better combustion equals more
power and decreased particuliate emissions - both of which are the bane of
diesel engines.  John Deere offers a similar engine design for their new farm
tractors, but it's called something different.

At least this is how it was explained to me...

Alan Bosch
& a bus named Phred ('88 Wolfsburg)
Former owner of a '82 Diesel Rabbit named Rumblefish