Echo is annoying effect that you experience over a phone call when you hear your own voice back after some milliseconds (one millisecond is one thousandth of a second). The amount of time after which you hear the echo varies depending on the factors that are causing the echo.
An echo of a few milliseconds is bearable; you only feel as if you are speaking in an empty room. An echo of a few hundred milliseconds can be extremely annoying and can affect the call completely.
For echo to be noticeable, it has to be loud and delayed. Delay already exists in PSTN, but it is more noticeable in VoIP because the latter has more delay.
PSTN phone calls function with a delay of no more than 10 milliseconds, while VoIP can have up to 400 milliseconds of delay. You can bear with a little echo is you are benefiting from a free service, but you will be very much annoyed if the service is one you are paying for.