The Onion Router (TOR) simply explained is a combination of both a proxy and a VPN.
Tor has a very interesting origin & history, but still remains relatively lesser know and lightly used by the general web focused user base at large.
To use Tor, you will need access to a Tor Browser. This will then connect you to the Tor Network, where you can visit Tor specific websites that are not accessible from general internet web users; and also browse the surface web anonymously. Tor creates an encrypted tunnel between your device and a Tor relay (the perimeter of the network).
Using Tor protects you primarily from hostile network providers and oppressive national governments that look to restrict access to internet sites from within their country. Your network connection is encrypted with three session layers and routed through three relays globally before you access the internet. In doing this your true IP address is hidden from websites.