Used to describe graphics made of mathematical objects called vectors such as curves and lines. Since every object can be defined as an equation, vector graphics can be scaled or transformed (e.g. rotation) without loss of detail unlike bitmap images. Also you can easily modify an object or a group of objects without disturbing others. For instance you can change the color of a circle by selecting it with the mouse and assigning a new color however you must literally paint if you want to change the color of a bitmap circle. On the other hand, the convenience of vector graphics comes with a cost: you cannot reproduce continuos tonal ranges of photographs or paintings. You can create smooth gradients or even simulated brush strokes (see Adobe Illustrator), but still there are certain limitations.
The program responsible for handling vector graphics converts vectors to bitmaps in order to physically show them on computer screens, which can only display pixels. Therefore the end result is always a bitmap image regardless of the underlying method of producing graphics.