Essentially, WWE NXT is the WWE's minor league. Every sport has a minor league and this is WWE's minor league. Superstars who aren't fully developed train in NXT and put on a show like Raw and Smackdown once a week until they are ready to be called up to the main roster.
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NXT is a show owned by WWE. It's a show they broadcast on their website, wwe.com. The show was originally supposed to be a competition where a bunch of rookies would compete in both challenges and matches to see who could become WWE's next star. The rookies would have WWE Pros coaching them through the competition. Noticeable stars that have come out of NXT are Wade Barrett and the World Heavyweight Champion, Daniel Bryan.
It is a developmental brand. This is where upcoming superstars can work to join the main roster of WWE. This is where many popular current WWE superstars and divas came from like Dean Ambrose, Roman Reigns, AJ Lee, Paige, Bray Wyatt and even Daniel Bryan started out before entering the main roster.
It stands for Next Generation since the intended purpose of the show is to get new wrestlers ready so that they can head to Smackdown or Raw at the end of the season.