Many people that I talk to are somewhat confused about what Voice over IP really is. VoIP is just another way to transmit voice in a digital format. Voice has been digitized and transmitted in digital formats for decades. In the past it has usually been circuit based meaning a conversation or multiple conversations are transmitted on connections created specifically for this purpose. A good analogy might be the tube at a banks drive up teller.
VoIP is a packet based technology, a way to transmit voice in packages like an envelope. This allows connections across multi-purpose data networks. A good analogy might be the US Mail system, where you enclose what you want sent and address it so many types of items between many locations can be mixed together and delivered using a common infrastrucure. Because these networks are becoming ubiquitous (widespread, constantly encountered, everywhere) using this infrastructure can improve efficiency and increase flexibility.
-Dale
Seattle area top provider of telecommunication since 1984 