Where the data is encrypted at both ends so nothing in the middle can interpret the data. In effect it makes your activities invisible to the internet.

Most of your average joes on the internet are using it to hide their traffic. Normally without a VPN your internet usage can be tracked to se who and what you are connecting to based on the info in the routing. What a vpn does for these people is basically directs all of their traffic to be encrypted then go through a stop before being routed to its final destination that scrubs the of any self identifying info. It can be used to make your traffic appear to be coming from someplace other than your computer. Many use VPNs to get around geoblocked content like say accessing free BBC feeds from america.

Normally the BBC would be able to see that your traffic is coming from america and the content that would be available to you at the BBC site would be filtered based on the licensing standards in place for people from outside Britain. With a vpn your trafic is routed through an exit point inside the UK so that the traffic appears to be coming from the UK, or whatever country you are trying to be seen as coming from.

It was designed originally to ensure the security of information being passed over the internet and has sort of morphed to being used as a way to hide all activity regardless of the nature of the activity.

You may have software installed though that that forces a private connection through a vpn. But yes unless you purposefully set one up there should not be one present.

people who live in heavily monitored or filtered internet locations use it for exactly that.

And no you would not be using one without purposefully setting one up. Unless it was installed by some third party software you have on your machine that you are unaware requires a private connection that installed a VPN to use when using that software. Many high security apps require a VPN to connect to the services they use. Travel agents for example often use a VPN to connect to their booking software back ends to ensure the privacy of the info being transmitted.

As far as how it works ... Basically when used as a way to hide internet activity it adds a stop on the road your information takes to its destination that masks the incoming and outgoing traffic so that it appears to be coming from wherever that stop on the road is instead of coming from your computer. So if you were in china using a VPN to connect to america you would chose a VPN service that has a server in the US and when you connected to you tube in the US what would be happening would be you would be actually connecting to the VPN server inside the US which would then change the packets so they appear to originate from the server in the US instead of from wherever you were in China before being passed on to youtube.

It is more complicated than that but that is the basics of what is going on.

Usually you have to sign up to use one, so you would know if you have it. there is software you have to enable to log onto a vpn.

Since the point of a vpn is to have anonymity while browsing, using one of the paid ones is best. Free ones capture and sell your information.

Torrent Freak lists best VPNs a couple times a year, here is the 2016 rankings...the first happens to be the one we use.
https://torrentfreak.com/vpn-anonymous-review-160220/

It's the creation of a tunnel (via encryption and encapsulation protocols) to allow remote access to a private network.

Keep in mind a VPN adds to the route your traffic would normally take so it will have an impact on your speed. Some VPN providers are better than others and have plenty of bandwidth to serve their users so the impact is fairly small. Others oversell their service and the impact can be anywhere from not too bad to downright debilitating.

What is VPN?

A virtual private network (VPN) is a technology that creates an encrypted connection over a less secure network. The benefit of using a secure VPN is it ensures the appropriate level of security to the connected systems when the underlying network infrastructure alone cannot provide it. The justification for using VPN access instead of a private network usually boils down to cost and feasibility: It is either not feasible to have a private network — e.g., for a traveling sales rep — or it is too costly to do so. The most common types of VPNs are remote-access VPNs and site-to-site VPNs.

remote-access VPNs:

A remote–access VPN connection allows an individual user to connect to a private business network from a remote location using a laptop or desktop computer connected to the Internet. HowStuffWorks.com. Aremote–access VPN allows individual users to establish secure connections with a remote computer network.

site-to-site VPNs:

Site-to-site VPNs connect entire networks to each other — for example, connecting a branch office network to a company headquarters network. In a site-to-site VPN, hosts do not have VPN client software; they send and receive normal TCP/IP traffic through a VPN gateway.

A virtual private network (VPN) extends a private network across a public network, such as the Internet. It enables users to send and receive data across shared or public networks as if their computing devices were directly connected to the private network. Applications running across the VPN may therefore benefit from the functionality, security, and management of the private network.

Not just only for this! There are many more reasons people use VPN, the main purposes are following.

Unblocking
People use vpn to access country or region blocked websites. VPN helps them by relocating their IP so they can easily unblock websites.

Streaming
VPN helps in decreasing streaming throttling and accessing websites. Like most popular streaming websites Netflix and Hulu are only limited to USA citizens so people outside the US use VPN to access entire content of these website.
People also use VPN to watch sports on their favorite TV channels. You can know more about streaming VPN at USAVPN.com/vpn-for-streaming

Torrenting
VPN helps you to download torrents securely.

Security
To protect your self from identity thefts during using public wifi and more...

These are the few main reasons people are using VPN.
To know more about VPN, setting guides and list of best VPN go to USAVPN.com its the best review website.

From what I can tell, you're asking about a VPN service to use from wherever your computer is located to reroute through another to reach the internet. This can hide your IP and location and add a level of security.

In addition and most precisely a VPN connection can be made from a computer on the internet to a LAN in another location. I have a VPN setup a home which I can connect through to get a secure tunnel and local IP on my home LAN. Many services are setup to provide certain accessibility to addresses on the same LAN but not outside to the internet.

For example, if I want to use the remote desktop function from my laptop while out of town to a pc at home, I need to setup port forwarding on my router from the outside to the correct IP. Or I can connect via my VPN and not have to bother changing my router config.

Some companies I've worked for have VPNs configured for folks like me that regularly work remotely. This allows connections to the company intranet and network shares.