VATS is a Beth creation. They revamped the entrie combat system, going from turned-based to FPS and threw in a revamped system of targeting called VATS.
It was just "targeted attacks" during the games turn-based combat. Something you couldn't do if you picked the fast shot trait but... they canned traits. From what I can tell, yes you can target the body parts, but I don't know if the execution is proper. I'll have to decide for myself how I feel about it once I play it. I still have other complaints, like the cutting of the traits and getting a perk every level.