VST (Virtual Studio Technology) is a plugin interface standard for connecting audio synthesizers and effects to sequencers, audio editors, etc. VST and similar standards allow traditional hardware synths and effects to be replaced with software.
VST plugins are software modules of which there are two kinds - VST instruments and VST effects. The VST plugin standard was created by Steinberg to allow third party developers to create plugins for use in VST hosts. The standard is cross platform, and is available on both Windows and Mac platforms.
VST instruments, otherwise known as VST synths or VSTis, generate sound in response to MIDI input - typically from a sequencer or keyboard. VST instruments fall into two main categories; samplers - which play back recorded sounds, and synthesizers - which generate sound mathematically. Some instruments, such as Alchemy blur the boundaries between sampling and synthesis, by allowing you to analyse samples and then re-synthesise them.