VoIP is a technology that allows users to make voice calls using an internet connection rather than a regular phone line. It works by converting analog audio into digital data packets that travel over the internet. While early VoIP systems in the 1990s allowed basic computer-to-computer calling, it has grown to support calling to and from traditional phones as well. Advantages include lower costs compared to traditional phone service and additional features, though disadvantages include potential issues with emergency calling location and security risks from hacking.