VPN stands for Virtual Private Network. Practically speaking, using a VPN enables the user to change his primary IP address in to a dummy one, which is mostly done to dodge internet settings to avail certain privileges, that one can't otherwise avail using his primarily IP address. VPN came into picture as internet became popular with time. As people started using internet more and more, they also came to know about certain problems and VPN came to rescue them in those problematic cases.
For example, some sites like Netflix are country specific and they can't be accessed from anyone who lives outside US. Interestingly, computer uses IP address to determine the location of a user and VPN enables the user to change his IP as per his requirements. So, if you would like to access Netflix from Russia or any other country outside US, you simply have to access the site using a VPN which has an IP from US. This will make your IP from US and you will be able to access the site.