Your computer (with your real IP) ---> VPN Server (that gives you a "fake" IP) ----> Internet
If you still don't completely understand, hopefully a real world example will help you out. If you go to http://whatismyipaddress.com/ you will see all the information anybody in the world could have just by obtaining your IP. Check this out:
With a VPN however, your IP gets masked and all your data gets encrypted! That way any login information or passwords you send online are encrypted before they get encrypted by the website you visit (ex. Paypal encrypts the data you send them once you login, with a VPN the data is encrypted once and then a second time by Paypal) Same website only I'm connected to a VPN:
As you can see, my IP now shows that I live in Switzerland! All the information that can be obtained by your IP changes (It's the internet, never good to show anything about yourself!). So if you want to add a bit more security to your online browsing habits, I would highly recommend purchasing a subscription to a VPN.
Talk about cost, it's about 9$ US a month for this service (including the firewall protection that encrypts your data). That's a pretty small amount to keep hackers and other people who wish to do you harm at bay! Hope this helps and happy surfing!
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