Round shields, bucklers, and (to a lesser extent) weapons have the ability to parry. You need to initiate your block shortly before you get hit to execute a parry. Parry is able to block more damage than standard blocking during the parry window.

If an incoming attack would do less damage than the sum of your weapon and shield parry values ([block armor] x [parry bonus]), your attacker will be stunned for a moment. Attacking them in this state deals bonus damage.

Tower shields lack the ability to parry. You can parry missile attacks. (For Hearth and Home, the devs patched that out because it made no logical sense. However, it was too fun so they brought it back in.)

I'm not sure where in-game relevant parry information is presented. Maybe the shield tutorial info? At the very least, parry stats are on relevant equipment, which should clue the player in on that capacity. The game tends not to hold the player's hand much, which can be refreshing for some players and frustrating for others.