A Virtual Private Network or VPN is a network that can only be accessed by a few elected computers that participate. This goal is achievable in more than just one way.
Private networks can consist of a single stand-alone Ethernet LAN. Or even two computers hooked up using a null-modem cable. In these cases, it is obvious that the network is private, no one can access it from the outside. But if your computers are linked to the Internet, the network is not private anymore, unless one uses firewalls to block all private traffic. But then, there is no way to send private data to trusted computers on the other end of the Internet.
This problem can be solved by using virtual networks. Virtual networks can live on top of other networks, but they use encapsulation to keep using their private address space so they do not interfere with the Internet. Mostly, virtual networks appear like a single LAN, even though they can span the entire world. But virtual networks can’t be secured by using firewalls, because the traffic that flows through it has to go through the Internet, where other people can look at it.
As is the case with either type of VPN, anybody could eavesdrop. Or worse, alter data. Hence it’s probably advisable to encrypt the data that flows over the network.
When one introduces encryption, we can form a true VPN. Other people may see encrypted traffic, but if they don’t know how to decipher it (they need to know the key for that), they cannot read the information that flows through the VPN. This is what tinc was made for.