VLAN stands for Virtual Local Area Network. The best way to think about VLANs is to think of each VLAN as a physical network. Only it's logical. Here's how you can visually think of VLANs:

You can see we have 3 networks - RED, BLUE, and GREEN. Each have their own subnet, router, and switch. There are 3 computers attached to each of these networks. Now imagine we combine these three separate networks into one physical network, but we still keep the RED, BLUE, and GREEN networks separate.

And just like that, we now have 3 independent networks running on a single physical network. Each of these networks is a virtual LAN inside the main LAN, or rather each of these networks is a VLAN inside the LAN. The only difference is that these LANs share existing equipment (such as the switch and router) but are logically isolated from each other.