[ro_bit]

Paper itself is a series of patches over the official vanilla server implementation. You can convert a vanilla server to a paper server just by replacing the vanilla server.jar file with a paper server.jar one, and converting back to a vanilla server can be done fairly easily (but a bit more difficult than dropping in)

It's much, much more performant, and able to handle a lot more players/chunks loaded/etc on the same setup compared to a vanilla server. Along with significant performance improvements out of the box, it also adds more configurations (vanilla has server.properties, but papermc adds paper.yml) which allow you to hand tune optimizations[1], from things like disabling player collisions, disabling block updates for certain laggy blocks, etc. These changes are configurable because they trade off expected vanilla behavior for better performance.

The real strength of paper though is that they do all this while also implementing the spigot API, which enables paper server owners to use a wide variety of server mods[2] that can allow you to add things like minigames, anticheat, etc while still being compatible with unmodified clients.

[1] https://www.spigotmc.org/threads/guide-server-optimization%E... (outdated but a bit more succinct) https://paper-chan.moe/paper-optimization/ (more technical)

[2] https://www.spigotmc.org/resources/categories/spigot.4/