Paper trading is when you use a simulated trade to practice trading with virtual (fake) money.
It gives new investors a chance to practice trading and getting used to their broker's software if your broker offers virtual trading.
It best used for new traders or traders learning a new strategy.
There are many places you can paper trade, check out this article to for a list.
If you are currently an Option Genius Advisory member, in the Basic section of trade school is an eBook to help you get started.