Skype is a software application that allows users to make voice and video calls over the internet. It was developed in 2002 and acquired by eBay in 2005. Key features include free calling between Skype users, low-cost calls to phones worldwide, and video conferencing. While it provides an inexpensive way to communicate globally, Skype has limitations such as requiring the called party to answer like a regular phone call and not allowing conference callers to see each other.