SIP is an internet Standard and as the name already descibes, it allows to Initiate sessions. These sessions can be simple voice calls or even videoconferencing, or even more advanced.
SIP is an official Internet Protocol standard and it is quickly gaining market in becomming the facto VoIP standard : http://www.cs.columbia.edu/sip/
SIP is open-source and also cross-platform in terms of software phones.
Various software phones are available, the market leader probably being Xten (www.xten.com).
The main strength of SIP based VoIP ? is the ability for users to choose different outbound service providers. See www.pulver.com, and search google for providers in your Country.
As the VoIP revolution takes hold, the cost of service provision drops.
It is now possible to get free local rate and national rate land telephone number to SIP termination : see http://www.voipuser.co.uk for examples.
SIP telephones (either hard or software) also support redirect, so I could have redirected my phone to that of someone else in my absence.
And just like 'normal' phones you can do transfers, conferencing etc. etc. (if your phone supports it).
The nice thing about SIP and the use of a SIP Proxy server is that it doesn't matter where your phone is at that moment. Let's say for example I'm going to spend a couple of days with my Parents.
Broadband internet is available so I take phone with me and plug it in the router at my parents house. My phone will login to it's proxy server and say: "hey I'm here".
From that moment on any of my calls will be available there.
See also VOIP