If your app depends on certain third-party code to be available you could declare a dependency and let your build system install the dependency for you.
If however the source of the third-party code is not very stable you could "vendor" that code. You take the third-party code and add it to your application in a more or less isolated way. If you take this isolation seriously you should "release" this code internally to your organization/working environment.
Another reason for vendoring is if you want to use certain third-party code but you want to change it a little bit (a fork in other words). You can copy the code, change it, release it internally and then let your build system install this piece of code.
Vendoring is the act of making your own copy of the 3rd party packages
your project is using. Those copies are traditionally placed inside
each project and then saved in the project repository.
The context of this answer is in the Go language, but the concept still applies.
Vendoring is hard-coding the often forked version of a dependency.
This typically involves static linking or some other copy but it doesn't have to.
Right or wrong, the term "hard-coding" has an old and bad reputation. So you won't find it near projects openly vendoring, however I can't think of a more accurate term.
Vendoring means putting a dependency into you project folder (vs. depending on it globally) AND committing it to the repo.
For example, running cp /usr/local/bin/node ~/yourproject/vendor/node & committing it to the repo would "vendor" the Node.js binary – all devs on the project would use this exact version. This is not commonly done for node itself but e.g. Yarn 2 ("Berry") is used like this (and only like this; they don't even install the binary globally).
The committing act is important. As an example, node_modules are already installed in your project but only committing them makes them "vendored". Almost nobody does that for node_modules but e.g. PnP + Zero Installs of Yarn 2 are actually built around vendoring – you commit .yarn/cache with many ZIP files into the repo.
"Vendoring" inherently brings tradeoffs between repo size (longer clone times, more data transferred, local storage requirements etc.) and reliability / reproducibility of installs.
As far as I know the term comes from Ruby on Rails.
It describes a convention to keep a snapshot of the full set of dependencies in source control, in directories that contain package name and version number.
The earliest occurrence of vendor as a verb I found is the vendor everything post on err the blog (2007, a bit before the author co-founded GitHub). That post explains the motivation and how to add dependencies. As far as I understand the code and commands, there was no special tool support for calling the directory vendor at that time (patches and code snippets were floating around).
Earlier articles referenced from the err blog, like this one (2005), seemed to use the lib directory, which didn't make the distinction between own code and untouched snapshots of dependencies.
The goal of vendoring is more reproducibility, better deployment, the kind of things people currently use containers for; as well as better transparency through source control.
Other languages seem to have picked up the concept as is; one related concept is lockfiles, which define the same set of dependencies in a more compact form, involving hashes and remote package repositories. Lockfiles can be used to recreate the vendor directory and detect any alterations. The lockfile concept may have come from the Ruby gems community, but don't quote me on that.
The solution we’ve come up with is to throw every Ruby dependency in vendor. Everything. Savvy? Everyone is always on the same page: we don’t have to worry about who has what version of which gem. (we know) We don’t have to worry about getting everyone to update a gem. (we just do it once) We don’t have to worry about breaking the build with our libraries. […]
The goal here is simple: always get everyone, especially your production environment, on the same page. You don’t want to guess at which gems everyone does and does not have. Right.
There’s another point lurking subtlety in the background: once all your gems are under version control, you can (probably) get your app up and running at any point of its existence without fuss. You can also see, quite easily, which versions of what gems you were using when. A real history.