Vocaloid has been around for quite some time already yet only a handful of people know exactly what it is and how it started out. Read on to know more about Vocaloid.
PictureIt's a computer program
What is Vocaloid?

Vocaloid is a technology developed by Yamaha that enables users to synthesize singing voices having the lyrics and melody as input. Songs are created by incorporating those lyrics into the melody and mixing in an instrumental track. Simply put, it's a computer program which allows a user to make vocals for a song without an actual human singer.

New songs made with Vocaloid are added to video sharing sites like Nico Nico Douga or NND for short and YouTube everyday. From there, it has generated a huge amount of fan-made content ranging from music videos to remixes as well as covers by human singers and dancers. 

This is what VOCALOID actually is
Here's a further explanation with the highly-popular song 'Senbonzakura' used as an example:
Source: http://ex.nicovideo.jp/vocaloid/about
And here are a few videos to better illustrate those terms:

Yamaha's official Introduction Video

Google Chrome feat. 初音ミク - it shows how the Vocaloid content is created and spread throughout the internet centering on Hatsune Miku

Is Vocaloid an anime?

Probably the most frequently asked question most people ask when they are new to Vocaloid. As you can see above, the answer is obviously NO. Each voicebank is usually represented by a character that usually fits its synthesized voice. Basically the core of the Vocaloid community is the music produced with the said software. Usually, these so-called "character designs" (more on that later on) may be given officially by Yamaha or by third-party companies who developed these voicebanks like Crypton Future Media and Internet Co Ltd which licensed the technology from Yamaha to create their own products.

However, there's a good amount of content made by fans that uses these character images like PVs (Promotional videos), dramas, doujinshis, short animations and many more.
On another note, It is a common misconception that Vocaloids are entirely Japanese - that is not true. Although the technology was first conceptualized by a Japanese man named Kenmochi Hideki, the first Vocaloid products were being developed both in Japanese (c/o Crypton Future Media) and English (c/o Zero-G Ltd) and the first released voicebanks, namely Leon and Lola, were in English. At those times though, Vocaloid wasn't popular yet and was performing poorly in sales. Basically, it was being marketed as a 'music-making' program for musicians. 
Leon and Lola by Zero-G Limited first appeared in 2004
It was not until Crypton Future Media, which was also struggling to get sales for their Japanese Vocaloids named KAITO and MEIKO, conceptualized the 'Character Vocal' series for their Vocaloid2 line-up that Vocaloids started to get fame; most notably, Hatsune Miku, thus becoming very popular in Japan. This was because these characters that appear on the box appealed to more people. Moreover, it served as an identity to a 'virtual' singer. Today, aside from Japanese and English, there are now Vocaloids in Spanish (Bruno and Clara by Voctro Labs), Korean (SeeU by SBS Artech) and Chinese (Luo Tianyi and Yan He by Shanghai He Nian) with some even having two or more languages.
Crypton pioneered the extensive use of character designs in Vocaloid in 2007 which became a huge success.
Where can I find some songs?

Obviously, NND and YT are a good place to start looking for Vocaloid content with NND being more organized and YT being more 'English-friendly'. Luckily, NND finally has an English version of the site so it is much easier to browse; there's even a section for Vocaloid http://ex.nicovideo.jp/vocaloid

You can also find the Weekly Vocaloid Ranking (VocaRan for short) on NND: http://www.nicovideo.jp/ranking/fav/weekly/vocaloid

Crypton's MIKUBOOK.com is also a good place to find some Vocaloid content: http://mikubook.com/ - You 'FAVE' content there and the site gets more suggestions based on your 'FAVES'

You can also find some by joining in online communities like VocaloidOtaku, VocaShare and Vocaloid Pilipinas. 

I'd love to get that song...

Most producers usually offer a download link. If not, locate the NND code in the NND URL or in the description if it's a reprint on YT (something like this: sm15630734), then paste it in this NicoSound URL:

nicosound.anyap.info/sound/smXXXXXXX - replace Xs with the code,

Then after the page loads, click on the "MP3 を抽出" button, to start your download. This is the most common method however, you usually don't get the highest quality.

It is encouraged though that if you really like the song and the producer who made it, please do support them by purchasing their albums especially the physical ones - Trust me, it's cool to have something tangible and some even have extra stuff you might enjoy especially the limited edition ones and plus, you get the highest quality possible from an album.
Aside from the music, you usually get extras like a DVD for the PVs and an illustration book! (from: Reigan's Bloggie)
Are there other similar software like VOCALOID?

There are many similar "voice synthesizers" out there that basically does the same thing but here's one that's has become very popular and has since been considered as an alternative or even a complement to Vocaloid.

UTAU, like Vocaloid, is a voice synthesizing software developed by Ameya. One notable distinction of UTAU aside from it is available for free is that users can make their own voicebanks collectively called UTAUloids that work with UTAU.

Basically, anyone can now have a synthesized voice with UTAU and the concept of sharing works online like in Vocaloid still applies here although with a few additional ones like collaborations when it comes to UTAUloid "character-making" and cross-promotions.

There are a lot of things about UTAU but I'll reserve that for another time.
UTAU is officially available only in Japanese but an English patch made by the overseas UTAU community is available.
edit: I have made follow-up article which you can find here. (It does talk more about UTAU but again briefly. I'm still planning to write an entry solely about UTAU.)

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