PHP is an acronym for "PHP Hypertext Preprocessor". PHP is both a scripting language which can be embedded in a text file, and an interpreter for that scripting language. The context usually implies which of the two is being referred to.
PHP is usually used with a web server to provide dynamic content for a website. PHP scripts can be used to process web form submissions, to take web page content from a database, to store information in a database, to perform calculations, to modify page content depending on the browser being used, to implement a shopping cart, to provide a discussion board, to send E-Mails, to upload files, ...