Vocaloid 1, 2 and 3 are basically voice synthesizing applications. You can buy different "Voicebanks" you can make music with.
Hatsune Miku is the most popular voicebank from Vocaloid 2.
The awesome thing is that Vocaloid has so many unique voice types and the Vocaloids can sing in various languages, such as English, Japanese, Chinese, Spanish etc. Some Vocaloids sound very human-like, while others sound very robotic.
There's a lot of music generes created with Vocaloid, from opera to hard rock!
Many people are Vocaloid fans because they simply enjoy listening to Vocaloid or working with them by making covers/songs with them, drawing them fanart, etc.