There are two types of Internet based VoIP service, computer based and telephone based.
Computer based VoIP
Computer based service uses a microphone and an earphone connected to the computer's sound system. Calls are announced on the computer so there is no need for a telephone bell. Some providers offer a special telephone that can be connected to the computer.
Computer based VoIP is often free as long as both parties to the call are using it. There may be a charge to connect to another type of service or to a landline.
One example of a computer based VoIP service is Skype.
Telephone based VoIP
A telephone based service uses an Analog Telephone Adapter, or ATA, to connect a standard telephone to the Internet. The ATA can also replace the Telco feed to the telephone jacks in your house. In some cases it can be connected to a private telephone system, or PBX.
The ATA provides the necessary voltages for talking and for ringing. No computer is needed, just an Internet connection. The ATA must be registered with your VoIP provider before it will work. This is often done when they mail the ATA to you so nothing is required when you receive it.
This type of service usually includes caller ID, call waiting, 3-way calling, and many of the other services for which the Telcos often charge quite a bit. Some providers offer a service, usually free, that will attempt to locate you on several numbers, i.e., cell and home, before putting the call to voice mail.
Examples of telephone based VoIP service include Vonage, Verizon Voice Wing, and Voice Eclipse.