ESP (Encapsulating Security Payload) - IPsec VPN Tutorial
Encapsulating Security Payload (ESP) provides all four security features of IPsec. These are confidentiality, integrity, origin authentication, and anti-replay protection.
Confidentiality ensures data is encrypted. Integrity ensures data in transit has not been tampered with. Origin authentication ensures the remote peers are who they claim to be and anti-replay protection will ensure duplicated traffic is not accepted which would prevent DOS attacks, as well as spoofed traffic.
ESP can operate in either tunnel mode which is more secure due to encrypting the routing information, header information and IP payload, or ESP can operate in transport mode in which it only encrypts the IP payload. Tunnel mode is usually used between gateways through the internet, and transport mode is usually used for host to host VPN’s such as between a server and a computer.
In a nutshell ESP is a security protocol used with IPsec which provides source authentication, confidentiality and message integrity.Further Reading
Wikipedia's guide to IPSec