"What is an IP Camera?"

An IP camera is a security camera that use the Website to transmit images, video and control signals.
The data is transmitted in a digital format (currently best is H.264) over an Ethernet connection.

IP camera, is a type of digital video camera commonly employed for surveillance, and which unlike analog closed circuit television (CCTV) cameras, it can send and receive data via a computer network and the Internet. (definition from Wikipedia)

this "network camera" are most often used for IP surveillance, a digitized and networked version of closed-circuit television (CCTV).

When connected to a computer network, Real-time online video can be viewed and managed over Internet and your advanced
mobile phone inlcude Iphone and Blackberry etc in any time from anywhere in the world.

Function
It can be installed alone or in a group, and the quality of the images are better than analog. Used in video surveillance, an IP camera allows numerous cameras to be monitored and viewed from any location over the Internet. It simply requires access to a conventional Web browser. Each IP camera on a network has a unique network address and functions as a video server. There are a wide variety of protocols based on the camera type, including HTTP and TCP/IP.

Benefits
In some cases you may already own most of the equipment needed to set-up a IP camera security network, such as a PC and access to the Internet. If the camera is placed in a large location, because the need for coaxial cable is eliminated, installation is easier. This can drastically reduce the cost when numerous cameras are installed, especially over a large area. The only wire need is the Ethernet connection or the CAT5e, which can provide the power and network connection. Stand-alone IP cameras include internal features, such as motion detectors and video analytics software.