VoIP converts the voice signal from your telephone into a digital signal that travels over the Internet. If you are calling a regular phone number, the signal is then converted back at the other end. VoIP can allow you to make a call directly from a computer, a special VoIP phone, or a traditional phone using an adapter. 

A softphone, ip phone or ATA can be connected to network and utilize voip services. Generally VoIP users can call each other for free. If VoIP users dial a PSTN number, the call is sent to VoIP gateway which in turn utilize other VoIP termination service or connect directly to PSTN network through T1 or E1 lines and terminate the call to PSTN network. Generally VoIP users are charged for PSTN calls but the cost is normally lower than traditional PSTN services.