The German "Habilitation" serves as evidence of an individual's capability of researching independently and of teaching in a certain subject area. Traditionally in Germany, a habilitation serves as a formal qualification needed to become a university professor. Along with the habilitation, one is awarded teaching qualification (Lehrbefähigung) and (upon request) a teaching license (Lehrbefugnis). For a professorship at a university of applied science, there is no need for habilitation.
As an alternative to habilitation, there are other options to qualify for the position of university professor (see here). If you aspire to become a university professor, you should find out how important the habilitation is within your discipline. In some disciplines, most newly appointed university professors did not do a habilitation, whereas in other disciplines it is almost impossible to get a professorship without habilitation. Only with the discipline-specific knowledge you can decide whether or not you would like to complete a habilitation.
If you would like to work on a habilitation, you should have a professor who supports your plan. This relationship is typically not as close as it was during the doctoral phase.
For the habilitation, you must complete both written (habilitation thesis; cumulative work, if allowed) and oral tasks (an academic talk with colloquium, public talk). Specific regulations about the habilitation can be found in the faculty-specific regulations of the university's Regulations for habilitationExternal link (in German).