What are ETFs?

It is a type of fund that includes a collection of securities, such as stocks, that often track an underlying index, although they can invest in any number of industries or use different strategies. ETFs are similar to mutual funds in many ways; however, they are listed on stock exchanges, and ETF shares are traded during the day just like ordinary shares.

A famous example is the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index. An ETF can contain many types of investments, including stocks, commodities, bonds, or a combination of different investments. An exchange-traded fund is a tradable security, meaning it has a price attached to it that allows it to be easily bought and sold.

I will add something that maurycy has not written yet, i.e. types of ETFs

There are different types of ETFs available to investors that can be used to generate income, speculate, increase prices, and to hedge or partially offset risk in an investor's portfolio. Below are some examples of ETF types.

Bond ETFs can include government bonds, corporate bonds, and state and local bonds known as municipal bonds.
Industrial ETFs track a specific industry, such as technology, banking, or the oil and gas sector.
Commodity ETFs invest in commodities, including oil or gold.
Currency ETFs invest in foreign currencies such as the Euro or Canadian Dollar.
Reverse ETFs try to profit from falling stocks by scarcity. Short selling stocks, expecting them to fall in value and buying them back at a lower price.
Investors should be aware that many reverse ETFs are exchange quoted (ETNs) and not true ETFs. An ETN is a bond, but it trades like shares and is backed by the issuer like a bank.
In the United States, most ETFs are structured as open-end funds and governed by the Investment Company Act of 1940, except where later legislation has modified their regulatory requirements. Open-ended funds do not limit the number of investors involved in the product.