A VPN creates a virtual network that encrypts your data, your ISP know how much data is being passed over their network, they can't see what that data is, of course it can also be used for making your location look like you're elsewhere, handy for accessing regional locked content etc.
If you're connecting over public networks, it stops your data being intercepted, I used one in my old role, we had a VPN setup so that when accessing company servers, only the VPN server IP was whitelisted, no VPN running and I couldn't access the servers, good for security.
Like anything they can be used for good and evil purposes.
