Voice Over Internet Protocol
basically chatting on a phone but connected by a 'puter/internet/broadband not a phone line as normal
http://en.wikipedia.org/wiki/Voice_over_Internet_Protocol
Thanks, I think, bit technical for me, I can use Skype, which is phone but still need bt for internet unless I use my dongle..... 
Skype is a form of VOIP. A pretty piss poor form mind - non standards based, and reliant on computers being switched on. Also, no links with other VOIP providers, so unless Skype-Skype calls, you pay.
Vonage (and others) use standards based SIP to call, and there are hundreds of SIP hardware phones, such as Cisco 7000 series, and cheaper options from noname companies. I use a Linksys hardware adapter that plugs straight into my (analogue) Norstar, so my 2 real lines and 2 VOIP lines are presented at every phone.
I used to use one of the VOIP lines for fax, but now use fax-email services.
Now I use one of my VOIP lines to call VOIP enabled family (free) and my relatives in Canada (too old to use technology) at 1ppm.
The other VOIP line - an 0845 number - I give to people who would be long distance, so they can call me at lower rates from their BT landlines.
Other advantage, those lines follow my linksys adapter - so if I stay with family for a few days, I take the adapter with me, and the lines are with me (just plug a phone into adapter).