It's the highest balance (closed trades) that the account has ever reached.
So for a $100k account, when it starts, the High Water Mark is $100k.
As the account grows in realized profit (balance), the High Water Mark will go up with it. The Max Drawdown is 5% of the Starting Balance and trails the High Water Mark.
We have a lock-in feature to help our profitable traders. Once you have made 5% in the account (so 105k balance in this example), the Max Drawdown Level locks in at the Starting Balance (100k in this example). This is true for both the evaluation and funded accounts.
So, if you start at $100k and are profitable all the way to $200k, the Max Drawdown Level would still be locked in at $100k, and the max daily drawdown rule still applies.