Instead of go too in-depth on something I know precious little about, I'll let
this webpage explain it for me.
It should at least give you a 'in a nutshell' idea of what pixel and vertex shaders are and where they are used.
For a layman term, shaders are graphical fluff. Make your flat box water texture come alive and be reflective and all that with shaders. You've probably seen these effects in lots of newer games.
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