I'll share what I have learned, then someone who really knows can come along, tell me I'm full of it, and enlighten us both.
VST plugin functionality orginated with Steinberg and has, apparently, become something of an open source standard. There are a whole bunch of VST plugins. Some duplicate hardware functionality, e.g.,
BBE Sonic Maximizer or a
compressor, some duplicate instruments, e.g., a
piano, some do things that I probably cannot imagine. Some are free, some are
expensive.
A whole bunch of applications use VST plugins. Right now I am screwing around with
Abelton Live, which uses them, and I must say, it is pretty nice.