Instead of spinning up a VM on your local machine it spins up a new droplet in your Digital Ocean account (droplet is DO's term for a virtual server).
> Also, maybe someone can drop a few words in on the typical usage scenario for Vagrant? Other than automation, how else does Vagrant help a developer, and how does it tie into the various VPS services (such as AWS, DO, etc...)?
Vagrant lets you define a server environment that you can turn on with just a simple "vagrant up". For apps that have server dependencies (who doesn't?) like databases or MQ servers, you can isolate them into a standard VM. If someone else is going to work on your app then they can get started immeidately via "vagrant up". No need to manually setup the server dependencies, it'll all automagically build itself.
Once you start using it you'll never go back to manually setting up server dependencies for dev. It pays for itself in time savings the first time you use it.
Vagrant integration with AWS or DO is simply to have the server spin up there rather than locally. Even cooler is the expermental Docker integration (as a provider) as it lets you run many Vagrant VMs with minimal overhead.