Voice-over-IP (VoIP), is means of transportation of speech and data over the data network. Transportation of the voice (speech) is via the Internet Protocol (IP). Analog speech signals are digitized like ISDN and transformed into small (IP) packages transported over the (internet)-network. At the other end (receiving party) all packages are linked together and transformed into an analog signal again.
IP Telephony is currently a magical word. Understandable, because a numerous amount of companies have taken this important step forward enabling there business communication with VoIP.