ESTA stands for "Electronic System for Travel Authorization". ESTA is an online application system developed by the United States government to pre-screen travelers before they are allowed to enter the United States. Due to the increased security regulations that went into effect on January 12, 2009 - visitors traveling under the Visa Waiver Program must apply for a Travel Authorization in advance of their trip to the United States. In addition, all travelers must have a machine readable passport in order to gain admittance into the United States. The ESTA application process is entirely online and operated by the U.S. Department of Homeland Security (DHS).
All passengers (including children, who do not yet require a ticket of their own to travel) travelling under the Visa Waiver Program (VWP) must apply for and have an approved travel authorization prior to travelling to the United States by air or sea.
The electronic travel authorization merely establishes that you are eligible to travel to the United States under the Visa Waiver Program. Upon arrival in the United States you will be inspected by a Customs and Border Protection officer at a port of entry, who will decide whether you may actually enter the USA.
No, an electronic travel authorization does not serve in lieu of a United States visa when a visa is required under United States law.
Unless revoked, travel authorizations are valid for up to two years from the date of issue, or until your passport expires, whichever comes first.
Applications may be submitted at any time prior to travel to the United States. It is however recommended that travel authorization applications be submitted at least 72 hours prior to travel