A value bet, in the most simple terms, is a bet where the odds secured on the bet are higher than the 'true' odds of the bet winning.
For example, in a coin toss, there is a 1 in 2 chance of the coin landing on heads.
If you manage to get odds of 1 in 3 chance (3.00), then this would be a value bet, as the odds are suggesting there's a 33% chance of the coin landing on heads whereas we know the true probability is 50%.
How do we know if a bet has value?
In betting, we know a bet is value if our odds beat the closing line. The closing line is the odds on the betting exchange/bookmaker right before the event starts.
For example:
A horse is 5.00 on a betting exchange to win 1 second before the event starts.
We consider 5.00 to be the closing line odds, representing the true probability of the horse winning.
If we placed our bet at 7.00 odds, we know our bet has value.
We generally go to the exchange to get an idea of the true odds of the event, as this removes the bookmaker margin and there are plenty more opinions available. Generally, as more money flows in, the closer we get to the true odds of the event.
In some cases, however, the exchange does not have enough liquidity to gauge the true odds. On a small market such as team offsides, it's better to gauge value by comparing to other bookmakers.