VPN stands for virtual private network. It sends your data through a private server and then sends the data to your client (the computer or mobile you use to connect to internet).
Since your data is sent through another server, it prevents your internet service provider or the government from spying on you.
For example, if you upload a photo to a standard http website, your internet service provider will be able to intercept it and see what's in the photo. That's why it is not wise to upload sensitive photos or data to unencrypted websites.
Thanks to https, most major websites protect users using encryption. But ISPs can still see what websites he / she visits.
What VPN does is, it sends the data first to a private server, then to the client. This makes it appear as if the VPN service provider is browsing the internet not the user.
So, the ISP or any website, sees the public IP address of the VPN service provider not the user. For example, if I am a US citizen and use a US based VPN service and set the IP to UK then, websites will think I am a citizen of UK.
Google Adsense will start showing UK based ads to me. If some websites are not accessible in USA, I would be able to browse them since the website doesn't know my actual location (but thinks I am from UK since I am using a UK proxy).
People living in China use VPN to browse websites that are banned by the Chinese government.
VPN stands for Virtual Private Network. It works by rerouting your IP packets through a server. What are IP packets? IP stands for Internet Protocol. It is a network level protocol that takes care of datagrams or packets being routed from one node to the final destination. IP nodes have what is called an IP address, which is a string containing four numbers separated by three dots that most people are familiar with.
The purpose of using a VPN to connect a server on the Internet is to conceal the origin of the packets, as in the IP address of your own computer. You can use a VPN to prevent the server from gathering data on you. Whether or not a VPN is secure is highly variable. A VPN provider can easily gather information about its customers and sell them to advertisers or reveal them to the authorities or be hacked. A free one will usually limit the throughput of its service and thus motivate its users to become paying customers, or worse, sell the data. It's a good idea to spend time picking a reliable VPN provider.
A VPN essentially adds IP routing to the client machine, to allow traffic to be intercepted that would otherwise flow through the routes established by the ISP.
Are they 'protected'? No, VPN is just an umbrella for changing the flow of traffic - you are likely assuming more risk with data flowing over a VPN, however, this depends on the nature of the provider. Do the homework to find a provider of VPN technology that is reputable.
Simply put, the VPN is a private, secured connection from your computer to a server abroad, then this server will connect again to the internet. In other words, people cannot see your true identity, they will only see the VPN's information.