Trusts are legal entities that hold assets for a particular beneficiary or purpose. To create a trust, a written document is created and signed by the grantor of the trust; Assets are then placed inside the trust by retitling them in the name of the trust. Trusts can have almost any type of purpose, except of course an illegal purpose, and can have almost any rule or type of beneficiary imaginable.
There are two types of trusts, living trusts and testamentary trusts. Living trusts are created and funded while you are alive, and testamentary trusts are created and funded after you die, usually through your will.
In the estate planning context trusts are primarily used for asset protection, probate avoidance, beneficiaries with special needs, and tax minimization. The most common use of a trust is for individuals with special needs or minors who will be inheriting money from an estate. (Pro Tip: If you are planning on giving money to someone with special needs consult an estate planning attorney to ensure they will not lose their government benefits).
Trusts can be very useful in the estate planning context, but it is not the only tool in the toolbox. Many individuals believe they need a trust, even though a simple will may be more likely to achieve their estate planning goals at a lower cost.