VoIP stands for Voice over Internet Protocol and allows users to make voice calls over a packet switched network like the internet. The document discusses how VoIP works by digitizing an analog voice signal, compressing it into data packets, transmitting the packets over the network, and reconstructing the analog signal at the receiving end. It notes benefits like reduced communication costs since calls are routed over existing data networks and increased flexibility since multiple calls can be transmitted simultaneously and secured. The document also outlines different ways VoIP can be used like between computers, computers and phones, or between two phones, and introduces softphones as VoIP software that simulates phone functionality on a computer.