VOIP is an acronym for Voice Over Internet Protocol, or in more common terms phone service over the Internet. If you have a reasonable quality Internet connection you can get phone service delivered through your Internet connection instead of from your local phone company. The Initial point in VOIP is to turn analog phone signals into digital signals that can be sent over the Internet.
There are two major reasons to use VOIP:
In general phone service via VOIP costs less than equivalent service from traditional sources. There are also some cost savings due to using a single network to carry voice and data.
VOIP makes easy some things that are difficult to impossible with traditional phone networks. Incoming phone calls are automatically routed to your VOIP phone where ever you plug it into the network. Take your VOIP phone with you on a trip, and anywhere you connect it to the Internet, you can receive your incoming calls.
Call center agents using VOIP phones can easily work from anywhere with a good Internet connection.
VoIP service providers normally offer their solutions over DSL or cable modem Internet only. VoIP service sometimes works poorly over satellite, dial-up and other forms of Internet access, although these options are sometimes available. Typical VoIP calls require about 90 Kbps for best quality.
Very good. So good, in fact, that some VoIP service providers must actually inject special sounds (called "comfort noise") into the transmission, so that callers don't mistakenly think the connection is dead.