Caramel is a sugar product, made by sugar caramelization. It is produced by heating water and sugar moderate temperature until the sugar dissolves and caramelizes, changing color into golden brown and taking a characteristic flavor.
In cooking, Caramel is mainly used ad a confectionery product. You can use it as a flavoring, a filling or a topping, for puddings, desserts, bonbons, ice creams, etc. For example, it is used to make French crème brulée. But it can also be used to caramelize meat or vegetables and make a sweet and sour recipe.
Fun fact: by using the same proceeding, you can get Caramel candies too. You just need to use milk instead of water, and to add some vanilla essence.