A SIM card identifies a phone to its mobile network. The eSIM does the same job with a chip built into the device and a profile downloaded over the air, removing the small plastic card. Support has widened across phones, tablets and watches.
For travellers the appeal is adding a local plan without hunting for a physical card, and for everyone it means one less slot to open. The downsides are that moving a number between phones can be less obvious than swapping a card, and support still varies by carrier and country, so the change has been gradual rather than sudden.