DAW = Digital Audio Workstation
A DAW is computer software used for recording, production, mixing, editing and most importantly composing of music. Plugins are used to provide the vast range of features.
The most important feature for us is the ability to work with virtual instruments, a kind of plugins. They can be a VST-Instrument or an instrument application in a software sampler like Kontakt or Halion, EXs24. There are VSTIs for everything, sampled acoustic instruments, choirs, sampled synthesizers or or native DSP-like synths generating the sounds from formulas.
Furthermore, there are a lot of effect plugins. The basic things like Reverb, Distortion, Amplifier, etc. and so much more!