Hangouts are a Google+ service which are used to video, voice, or text chat with other people. Hangouts are integrated with nearly all of Google's services, including Google+, YouTube, Google Drive, Android, and Gmail.
The video hangouts are compatible with certain applications that are specially designed for it. Some of these applications can do things such as display videos, animations, or other screens, or they can interact with certain web pages to help with productivity. A list of applications available for hangouts can be found here.
Hangouts are also available from mobile devices, including both Android and iOS. The hangouts can be accessed through Google's Hangouts App, which is also compatible with all three types of chat.
On The hangouts applications are called/known as apps. Some apps are pre-installed but others must be installed for free. The apps are installed from the Chrome Web Store.