The first guy is talking to the second guy, even though they're very far apart. We used to have to use a special part of the computer for this, but now we can use the regular part that we use for most of our other stuff.

We also used to have to ask another person every time we wanted to talk to each other this way. Now, some of the time, we can talk to each other without asking him first.

Explaining it like you're ten might be more useful:

You know Skype? Well, now we can do that on the Internet [Ed: I know, but you're ten, so bear with me]. Also, we can send the video straight from one computer to another. We used to have to send it far away, to another computer, and then he would send it to the person we were talking to. We can also hide what we are saying from other people.

Pretend you're mailing a letter to Grandma. Before, we had to mail a postcard to our mean aunt, who would send it to Grandma. Now, we can put it in an envelope and send it straight to Grandma's house.

Remember when we videochat with Grandma using Skype? Well, for that to happen she has to use Skype and so do we. There is no other use for that program but to videochat.

Now, we can videochat using the same program we use to play those silly Flash games instead. And we don't even have to be using the same program, she can use Firefox, and we can still use Chrome.

This also opens new things you can do that you couldn't before. Given that Chrome or Firefox do a lot more than just videochat, we can now embed videochat in all the other things the browsers can do, like in games or live support.