VWAP is calculated by multiplying the volume at each price level by the respective price and dividing by the total volume. The more volume traded at a certain price level, the more impact that price has on VWAP.
As an example, consider the following series of trades:
500 shares @ $10.00
300 shares @ $10.05
200 shares @ $10.10
The average price for these three trades is $10.05, however the VWAP is $10.035 because more volume was executed at the $10.00 level than at the $10.10 price. One of the keys to a successful VWAP trade is anticipating market volume and participating accordingly.