Scan tools are basically an interface device that is able to communicate with the on board control computer fitted in a vehicle. It has a special connection that fits into the vehicle wiring harness (or via an adapter plug on some vehicles).
The automotive industry introduced standards known as "on board diagnostics" standards ODBI and OBDII (OBDIII is currently under development). The scan tool is a software driven device that contains information about the particular vehicle it is fitted to and communicates with the various on board systems to determine status and condition.
The scan tool is normally used by a technician when a vehicle that is being serviced has a "check fault" indication via a mil lamp or check lamp on the vehicle dash. The scan tool is used to run diagnostic tests on the various vehicle systems and on completion of the tests, information is provided to the technician in relation to the probable cause of the fault.
Most manufacturers have proprietary brand scan tools for their vehicles, however the after market has produced several different of generic scan tools that when the appropriate software information is installed in the tool it is able to replicate the manufactures specific scan tool and provide technicians with the information they need to repair the vehicle.
Source: CDX Global & Wikipedia - en.wikipedia.org
