A PBX can come in two forms: a PBX box (hardware), and a Virtual PBX (software).
Both do basically the same thing, manage phone calls across a phone system. One of the only key differences is with a hardware PBX box, typically it could be designed to allow normal analogue telephones to have an extension with the PBX where as a Virtual PBX has nothing to connect these phones to so you are limited to using VoIP phones and/or softphones.
In any case, a PBX is used to manage all phone calls, phone lines, phone queues, extensions, dialing plans, etc. of an internal phone network system.
It can allow for example to have 1 VoIP line, and allow the incoming call to be sent to several extensions (individual VoIP phones). It can work the other way as well, allowing several independent VoIP phones to be registered to a central PBX to make outgoing phone calls. Traditionally your VoIP provider will only allow one SIP phone client to register with your VoIP account at a time, meaning if you have two VoIP phones, only one could use the phone service. With a PBX you can have the PBX register as the only software client, and then it will manage the calls on the internal phone network and allow multiple VoIP phones to make use of the same line.
Of course there are a million and one more uses of a PBX, some include:
- Ability to call individual phones in the network with an extension number
- Ability for several voip phones to make use of the same voip line
- Each VoIP phone can have a different 'line', so if PHONE A is in use, calls can still come in on PHONE B, and/or someone could make an outgoing call on PHONE B
- Ability to setup internal automated attendant extensions (eg for collecting voicemail)
- Set-up calling queues (eg technical support centre, users call in, placed in queue with music playing until someone is available.. then it rings the representatives phone extension)
- Allow the use of several telephone lines from a single VoIP phone. (eg, I can make qne receive calls from my Australian Line, Canadian Line, and other VoIP lines I have set-up, all from the same phone. This way I don't have to clutter the place with different phones for each active line I have and I can take advantage of the cheapest local and international call rates)
- Advanced dialing plans enable you to selectively choose which phoneline to use based on the format of the dialed number (eg pre-fix with 9 to use external line, or prefix with 1 to use north american line)
- A million more uses