A plugin is something you load in your DAW (recording software) and apply it to your tracks like an effect such as reverb or delay. The idea is that you can record a dry track and apply the amp/speaker simulations to your track(s) during mix down. It is kind of cool, if you can't find just the right tone, you could record your guitar tracks dry and then setup your tone while it's playing back.

Just to confuse you, and 5000 other people like myself

Seriously though, it's a common mistake.