A Virtual Tape Library is a disk based appliance that looks and acts like a tape library. The VTL presents tape devices and robots on a SAN. The VTL stores the data on disk drives and optionally can also create physical tape.
One other comment, because VTL is disk based a lot of people assume that they need to have storage administation knowledge to operate a VTL. Not true with NetApp VTL. The NetApp VTL was designed with the tape backup operater in mind, so it's as easy to operate as a tape library.