Oracles are software protocols that feed data from outside of a blockchain network into the blockchains smart contract in order to help inform the contract about how to execute based on accurate and real time information.

For example, an oracle could be used to determine the price of a Gold by feeding data from the Nasdaq stock exchange into a smart contract that is being used to create a token that is pegged to the price of Gold on the blockchain. 

Another example would be a smart contract sports betting platform that gathers data about the score of a basketball game in order for the smart contract to determine the outcome of the game and reward bettors accordingly.