GRASS is free Geographic Information System (GIS) software used for geospatial data management and analysis, image processing, graphics/maps production, spatial modeling, and visualization. GRASS is currently used in academic and commercial settings around the world, as well as by many governmental agencies and environmental consulting companies. GRASS is an official project of the Open Source Geospatial Foundation.
GRASS has a number of functions related to lidar and high-resolution DEM processing and analysis. lidar specific elements of GRASS are discussed here: http://grass.osgeo.org/wiki/LIDAR
GRASS Development Team, 2010. Geographic Resources Analysis Support System (GRASS) Software, Version 6.4.0. Open Source Geospatial Foundation. http://grass.osgeo.org See: http://grass.osgeo.org/download/index.php#citing