Vanilla is normal Minecraft, you cant add plugins or any type of mods because its normal Minecarft, as if you just made a new Minecraft Realm or a new world that your friends can join. However unlike making a realm or a new world you have full conrtol over all of your files in your server.
Additionally, Vanilla provides faster gameplay within your server. It can do this because it has no addtional mods or plugins, it is just normal Minecraft. Your game can run way smoother with Vanilla. Also Vanilla is the most stable version of Minecarft.
If this is not your style however, and you want to play with plugins or mods, then you can use Fabric or Forge for modding, if you want to use plugins then Paper is a stable option.