Definition of an IPSEC VPN


A VPN (Virtual Private Network) allows connection between two LANs using a third Network as a tunnel (usually the Internet)
Because the traffic that flows in the tunnel needs to be encrypted, the IPSEC protocol (short for IP Security) will allow authentication and encryption of each packet that travels on the tunnel creating what is called the VPN

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This is another good and more detailed explanation of IPSEC VPN:

What is an IPSEC VPN?

IPSec (or IP Security) offers methods to authenticate and encrypt IP traffic as if traverses a network. By doing this, that traffic can remain secure in transit. VPN (or virtual private networks) are created when network traffic is tunneled through another network. In our case, we are using IPSec to encrypt the VPN tunnel.

A site to site VPN tunnel is just a VPN tunnel that is, usually, permanently connected and used to connect two networks through another network (usually through the Internet). The Cisco router IOS can be used to create a site to site VPN tunnel using IPSec. You could connect a Cisco IOS router to another router, a Cisco PIX, Cisco ASA, or other brand of router/firewall. You should note that the IPSEC/FW edition of the Cisco IOS is required to perform the VPN (crypto) commands shown below.

source: http://www.petri.co.il/how-to-configure-ipsec-encryption-with-cisco-ios.htm

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