Now a days you really can do it all on your computer with just your audio interface and monitors! Today there are only a few hardware devices left that cannot be emulated by plug-in's. You all have the tools available to extend your Daw into a complete high end studio with all the virtual equipment you could need.
There are 3 basic software devices that work in the software realm of the digital audio sequencer plug-in's, these are: Synth's, Samplers and Processors. Each sequencer has a favored set of protocols when it comes to plug-in's, hence the need for multiple formats. Explaining: Plug-in Devices
Synths are an instrument or ensemble which generates sound based on building blocks of simple sound waves. These sounds can be very complex. Some of the popular synthesis methods are subtractive, fm, and wavetable.
Samplers; are an instrument that records and plays back samples, usually by allowing them to be distributed across a keyboard and played back at various pitches.
Processors, Process the sound with effects like reverbs, delays etc.
The Types
Each sequencer has a favored set of protocols when it comes to plug-ins, hence arises the need for multiple formats, here we will take a look:
VSTi: Virtual studio technology instrument; VSTi was developed by Steinberg as a universal platform for soft synths and samplers. Not all the companies bought into it but Cubase and Nuendo used it extensively. Then came VSTi2; an extension of the VST format, to pass on more parameters to the host for automation and so giving more options and control.
DXi: Cakewalk initially didn't go with VSTi; it went with DXi, which is based on Microsoft direct-X code. Today, however; they have given in and allow using VSTi-s with Sonar in a shell. But DXi-s cannot be run on Macs.
AU: This is short for Audio Units, and refers to a format developed by Apple for Mac OS 10.x.
MAS: Refers to plug-ins that work with the MOTU Audio System in Digital Performer (Mac only), which can also use VSTi, AU and ReWire. There are a few plugins that support MAS and that's because MOTU DP users can use AU as well as MAS.
RTAS: It is the format used by Digidesign, the maker of Pro Tools LE. RTAS will also work in Pro Tools M-Powered, which works with M-audio interfaces. RTAS plug-ins, however; will not work in Logic, Cubase or Sonar.
Rewire: Allows a user to pipe digital audio from Reason, Rebirth, Ableton Live (and more) to and from other sequencers by allowing running a sequencer through another sequencer. However, technically it can't be called a plug-in.
Remember you can visit the free online VST Directory tool to find tons of Free to donload VST plugins. Or if your a VIP Member you can use your own dedicated tool from the members area and search the rest of the formats as well.
