Definition
Tor (originally an acronym for The Onion Router) is a free, open-source anonymity network maintained by the non-profit Tor Project. Traffic is encrypted in layers and routed through three randomly chosen relays — each operated by a different volunteer — before reaching the destination. Each relay sees only the previous and next hop, so no single relay knows both who you are and where you are going. The destination sees only the IP of the third relay, the exit node.
Tor vs VPN
Tor and VPNs serve overlapping but distinct purposes. A VPN is faster, cheaper, easier to use, and provides reasonable privacy against most threats — but requires trusting one provider. Tor is slower, harder to use for streaming and gaming, and frequently blocked by major websites — but distributes trust across multiple unrelated relay operators, making it stronger against well-resourced adversaries. The two can be combined: Tor over VPN (VPN first, then Tor) hides Tor usage from your ISP; VPN over Tor (Tor first, then VPN) hides your real IP from the VPN provider.
When Tor Is Right
Tor is the appropriate tool for activities where the threat model includes a single VPN provider being compromised: investigative journalism, activism in hostile regimes, reporting on organized crime or corruption, accessing onion services, or any context where you need strong anonymity rather than convenient privacy. For ordinary daily browsing, Tor's slowness and the prevalence of blocks make it impractical, and a quality VPN is the more sensible choice.