SIM stands for Subscriber Identity Module. It identifies what networks and what services you are allowed to use with your device, and at what price. The physical SIM card has to be inserted in your device.
eSIM stands for ‘embedded SIM’. This means the card is downloaded and installed on your phone.
An eSIM does the same as a SIM card, but it is not a physical plastic card.
So, same functionality, no plastic!