Using density functional theory (DFT), Hartree-Fock, exact diagonalization, and numerical renormalization group methods we study the electronic structure of diluted hydrogen atoms chemisorbed on graphene. A comparison between DFT and Hartree-Fock calculations allows us to identify the main characteristics of the magnetic structure of the defect. We use this information to formulate an Anderson-Hubbard model that captures the main physical ingredients of the system, while still allowing a rigorous treatment of the electronic correlations. We find that the large hydrogen-carbon hybridization puts the structure of the defect half-way between the one corresponding to an adatom weakly coupled to pristine graphene and a carbon vacancy. The impuritys magnetic moment leaks into the graphene layer where the electronic correlations on the C atoms play an important role in stabilizing the magnetic solution. Finally, we discuss the implications for the Kondo effect.