Using vibrato when playing the guitar is when you rapidly move a note on a string up and down while remaining on one fret. The upwards and downwards movement can be very minimal, or it can be what is known as a wide vibrato. The more that you move the string, the wider the vibrato will be, however it is not really the same thing as a bend.
This is what the vibrato symbol in guitar tablature legend looks like:
The difference between a bend and the vibrato technique is that the bend is used to move the sound from one note to another. For instance if you play a C note and bend the string up one whole step then you will reach the D note. The vibrato technique is simply to add the feel of movement to the note you are playing. This technique can give the guitar a very vocal quality which has a soulful sound as compared to just playing a note statically. It also has a way of bringing life into the lead guitar notes you are playing.
This movement in the string can take some practice to get really good at controlling the amount of movement which is appropriate for what you are playing. The best way to practice this is to play a note on a string, and then gently bend it up and down repeatedly. This will produce a nice variance while still remaining on the same note.
There are a couple of other types of vibrato which you will find in the world of guitar playing. There are vibrato effects pedals, and this effect can also be found built into some guitar amplifiers. Also there is the vibrato bar which some guitars are equipped with and it is also known as a tremolo or whammy bar. This actually makes the same sound as physically bending the note up and down yet it is accomplished using the bar which can increase and release tension on the strings resulting in the tonal movement of the note.