<p>What are they and how do they work?</p>

<p>Context happens to be SQL Server</p>

According to
Wikipedia
:
[...] A traditional pipe is "unnamed" because it exists anonymously and persists only for as long as the process is running. A named pipe is system-persistent and exists beyond the life of the process and must be "unlinked" or deleted once it is no longer being used. Processes generally attach to the named pipe (usually appearing as a file) to perform IPC (inter-process communication).