VIPs are an attempt at bringing an additional bit of personality to each of the player's settlements by having settlers with unique stories that have alternate/additional clutter in their homes.
How They Work
When a settler is added to a settlement, the game randomly decides whether or not the settler has a VIP story (exact percentage chance to be determined, but assume it is in the <10% range). This, however, does not become apparent until the residence that the settler chooses reaches level 2 as the clutter at level 1 might be extremely subtle.
The word "choose" was on purpose due to the current mechanics requiring a specific residence type in order for the VIP status to be apparent, as the clutter was designed for a specific residence and thus would look garish in a randomized setting, however kinggath will address this in a future update. This also implies that it is better to have as many different types of homes in your settlement in the hopes that the VIP will choose their designated one.
The nature of the VIP is different compared to normal settlers in that they have their own story to tell through their personal clutter, and encourages the player to return to their settlements and look through the different homes to gain a glimpse into the lives of their residents.
An example of this would be a settler having samples of seedlings in their home at level 2, which upon upgrade to level 3 would turn into a magnificent and dominant tree in the middle of their home that can be seen from far off.
In essence, VIPs help enrich the experience of exploring the player's settlements with different and unique stories that help immerse the player in the game that the settlers are people rather than simple mindless drones that behave in an identical manner.