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From what I can understand, it is a very popular form of displaying "yourself" over a video such as if you were recording yourself for a video or for a stream. Many big YouTubers have a camera that just records them as they play the game - but a VTuber is essentially an extra step (green screen or AI technology that removes the background which leaves a person having their actions, motions, and expressions being captured onto a digital avatar which they then use to represent themselves instead of their actual physical selves).
I can't quite explain more than that (I'm not very big on the trend, personally), but Sega does have an official VTuber for Phantasy Star Online 2 and New Genesis (the character Popona from IDOLA Phantasy Star Saga was given a promotion from being a mascot and NPC into being a streamer and VTuber) - though acknowledged only for the Japanese side of things.
Pretty much what Vanilla said.
You pretty much use your anime character as overlay for yourself. Pretty much like wearing a mask so no one knows who you are just far more technological advanced.
I am really getting old. Thanks guys.
see the majority of players roleplaying as a cute anime girl
Streamer humans IRL people get injured, get less healthy, get less attrative, have different opinions that their fans dont like. By creating a streaming character, a streamer can create a consistent virtual face and since they are acting in character, what happens to the IRL life would mostly not affect the streamer character. So long as the streamer is able to seperate both.
For example the former #1 richest super chatted streamer Coco Kiryu retired from streaming with an anime avatar, the avatar was owned by the talent agency, She then continued on to her old personal channel as herself with IRL face. Many fans and the person herself has said that more fans prefer the 2D virtual character than the real person streaming.
Even to this day the most famous vtuber, Annoying Orange, still has a regular videos.