Exchanges are sites which allow for the conversion of Bitcoins to various world currencies as well as alternate cryptocurrencies.
An exchange offers a way for users to buy and sell Bitcoin for some other currency. Many exchanges will allow users to buy and sell Bitcoin for fiat currencies such as the US Dollar, British Pound, or the Euro. Many exchanges will also allow for trading other cryptocurrencies for fiat currencies and other cryptocurrencies for each other. For example, an exchange may allow Bitcoin to Ethereum trading.
Most exchanges that allow the trading of Bitcoin or other cryptocurrencies for fiat currencies require that the user submit identification information. This information is required so that the exchange, classified as a Money Services Business, complies with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations that are present in many countries.