A Vasco digipass is a device that generates a random security key number. This number is then used as part of your password to allow you to make various connections. We use it to access our work VPN network from external places such as our home broad band or wireless access points located across the country. I am responsible for maintaining the setup of new users so I am fairly familiar with the software used to set them up.
The setup isn't that difficult, you create a new user within the software, apply the Vasco tag to their profile then set a pin number (optional). The pin number is then used in conjunction with the vasco tag number to create a safe, secure network connection.
I'm not quite sure how this tag generates random numbers but everytime you press the tag it will change the number every few minutes.
Some of the issues I encounter working with these things are users not entering their password in the right format, pressing the Vasco tag and taking ages to enter their login details by which time the Vasco number has expired and also losing their Vasco tags because they are so small.
This tag probably wont mean much to anyone unless you actually use one in your work place. I would reccomend this setup to any business looking to establish secure connectivity from external sources. It basically allows a secure connection to the business IT infrastructure / Intranet.
I wish I knew more about the background of these devices but hopefully my brief review gives you a rough idea of what they do and what they are used for.