Codecs are used to convert the analog voice signal created by your phone or pc microphone to a digitally encoded signal. Different codecs will supply variations in sound quality, the bandwidth required, and the computer processing to convert the audio signal. Each VoIP provider, software or hardware phone generally supports several different codecs. The codec to be used can be generally be configured in the VoiP phone to tailor the quality/features required to support the bandwidth available from the local broadband connection.

If you are interested in further details on codecs this site provides a comprehensive overview, the average user will in general not need to know any of this information.