First of all, Altcoins are just all cryptocurrencies that aren't Bitcoin. Monero, ZCash, you name it, they are all altcoins. There are also tokens like Iconomi in the world that are incorrectly called altcoins- they are actually assets and not even that closely related to coins. Some of them use different algorithms to mine like Burstcoin which uses hdd mining to distribute its coins to users and some even only have PoS, and some with PoS and PoW like Peercoin. No matter what they do and what they are, they are all mostly called altcoins and you can call them altcoins as well.
ICOs are a way for altcoin makers to make money and help distribute coins to the community. Some very successful ICOs include Iconomi and Ethereum, of which the latter was very, very successful. If you invested in the Ethereum ICO you would have made many times your initial investment- this is not common nowadays as there are many more investors than there were previously, but profit is still possible. If you're looking for profit by investing into ICOs, you'll find there are a lot of coins that want attention and money, and it can be difficult trying to find the right ICO.
Some guidelines to follow with altcoins include effort and the method of coin distribution after the ICO, total supply, and also coin price. Be wary of poorly created coins and ones that don't have much effort in them as chances are the coin will be dumped for money or something similar if there is a premine. If a coin has a very fast method of distribution but a high price, the price of the coin will drop very quickly and you will lose money if you invest into it most of the time. Some coins also have too high of a price to be viable to invest in, even if the cause is good. Most such coins with high prices are hype coins and they usually die out very quickly, as do their prices- an example would be Zcash, which had an initial price in the thousands with no ICO or big premine. Price fell like a stone in the following weeks down to where it is, and there was even a big fork dividing ZClassic and normal ZCash. Striking the right balance is rare in the ICO world, but if you find a good altcoin to invest in, go with your gut. It can make you money or lose you money, but you have a good chance of making money either way if you follow these guidelines.
TipsLook for a dev team not a one man team
Always check the company behind the crowdsale (website whois, members linkedin etc).
Check the portfolio/ skillset of the developers
How realistic is the roadmap; can it be executed
Never, but never invest more that you can afford to lose