Vaults were introduced in 2020 by Andre Cronje at Yearn Finance as a way to automate the optimization of his personal crypto portfolio. As well as automation, they introduced relative ease of access and higher returns to what was a very complex and precise manual process that scared many potential users away.
Getting technical, a vault can be thought of as a container for holding DeFi tokens. Each container has algorithms attached (aka strategies) that have control over the tokens within. The algorithms make use of token composability to call 3rd party Web3 services to, for example, swap tokens for others, invest in liquidity pools, lend/borrow and stake.