Well, it is exactly what it says — a combination of vanilla and sugar. You can buy vanilla sugar in small jars (pricey!) if it’s available in your area. If not, you can make it at home. It’s easy and it’s cheaper. All you need are vanilla pods and sugar.
Vanilla pods are available in deli stores and baking supply stores. Not cheap, definitely. But you can make four cups of vanilla sugar with two pods. You can do the math and compare how much cheaper that will be.
So, let’s make vanilla sugar, shall we?

Take a vanilla pod and slit it vertically. Scrape off the seeds inside.

Put about half a cup of sugar in a jar (it’s easier if you start with just half a cup of sugar) and add the vanilla seeds. Cover tightly and shake until the vanilla seeds are well distributed and there are no visible clumps.
Add the vanilla pod to the jar and fill up with a cup and a half of sugar.
Shake, shake, shake. You have your vanilla sugar.
For best results, leave to infuse for about a week before using.
And just how do we use vanilla sugar at home?

When baking, when vanilla is listed in the ingredients, we just use vanilla sugar — no need for vanilla extract at all.
And we sweeten our coffee with vanilla sugar too.
P. S. Note that there are recipes that say you can use vanilla extract instead of vanilla pods to make vanilla sugar. I’ve never tried that so I won’t recommend it.