Masternodes are full nodes that secures the blockchain network. Masternodes works a bit like a complex computer or server that is connected to the blockchain.
Masternodes are often referred to special nodes that validates and secures new transactions on the blockchain. When a user have a masternode connected to the blockchain they get rewarded for their participation.
Masternodes needs to be running at all time to secure transactions and in return you earn an income from new coins as a reward. They are part of a Proof of Stake blockchain.