VoIP (Voice Over Internet Protocol) allows users to make phone calls over the internet instead of traditional phone lines. It uses CODECs to compress audio samples into small packets that are transmitted over IP networks and decompressed on the other end. Popular VoIP services like Skype allow free video and voice calls between users. While VoIP has advantages like low cost international calls, it also has disadvantages like unreliable sound quality and inability to make emergency 911 calls.