An outline font or vector font is a digital collection of vector images, consisting of lines and curves defining the boundary of glyphs. Early vector fonts were used by vector monitors and vector plotters using their own internal fonts, usually with thin single strokes instead of thick outlined glyphs. The advent of desktop publishing brought the need for a universal standard to integrate the graphical user interface of the first Macintosh and laser printers. The term to describe the integration technology was WYSIWYG (What You See Is What You Get). The universal standard was (and still is) Adobe PostScript. Examples are PostScript Type 1 and Type 3 fonts, TrueType and OpenType.
Outline fonts have a major problem, in that Bézier curves cannot be rendered accurately onto a raster display (such as most computer monitors and printers), and their rendering can change shape depending on the desired size and position. Font hinting has to be used to reduce the visual impact of this problem, which require sophisticated software that is difficult to implement correctly. Many modern desktop computer systems include software to do this, but they use considerably more processing power than bitmap fonts, and there can be minor rendering defects, particularly at small font sizes. Despite this, they are frequently used because people often consider the processing time and defects to be acceptable when compared to the ability to scale fonts freely.
More info: http://en.wikipedia.org/wiki/Computer_font