Polarized sunglasses are coated with a vertical film that filters out the horizontal light waves reflected off of smooth flat surfaces, such as roads and water. These reflected waves are commonly called glare.
Light waves change their orientation when reflected off a surface; a horizontal wave, when reflected, becomes a vertical wave and vice versa. A filter opposite to the orientation of the light wave cancels out that light, only allowing similarly oriented light in. This is why polarized lenses let light from the sun in, but not reflected, glaring light.
One issue with polarized lenses is that they typically block out the light from LCD and LED devices, as they emit horizontal waves as well. The manufacturers of such devices have to change the light wave orientation to make them compatible with polarized glasses.