VoIP is just a fancy acronym. The letters in VoIP stand for Voice-over-Internet Protocol.
In a nutshell, VoIP allows you to make phone calls over the Internet. You still use your telephone the same as before, but instead of plugging your phone into the socket on your wall, you plug it into the back of your modem or router (the box thing that connects your computer to the internet) instead. For most people, using VoIP means much cheaper call rates.
To use VoIP you'll need a broadband connection and a VoIP enabled modem or router.