VMT
A material is a .VMT text file in a mod's materials/ folder that defines the appearance and behaviour of a surface. Its chief component is usually a Valve Texture Format image file, but it also includes information about how the surface reacts when walked on, shot, or applied to a physical object, what shader(s) will draw it, what type of reflections to use, and potentially many, many other properties.
A simple example
LightmappedGeneric
{
$basetexture coast/shingle_01
$surfaceprop gravel
}
This is an example of a material for use on brushes.
- It is drawn by the
LightmappedGenericshader - It displays
materials/coast/shingle_01.vtf - It has the physical and reactive properties of gravel
A material for use on models would be identical except for the shader, which would be VertexLitGeneric. Valve's stock shaders generally support the same set of parameters (commands starting with $), allowing you to easily switch from one to another.
See Shader Types and Parameters for a full list of Valve's shaders, or Shader Authoring if you are interested in creating your own.