Alternatives fuels are fuels that are not made from fossil fuels (coal, oil and natural gas).
Alternative fuels can be better in that they are generally cleaner than oil and gasoline. Most alternative fuels are renewable, which means there can be a steady supply for a long time. Oil is not renewable. Development of new alternative fuels also can fuel the economy and new jobs. Alternative fuels have the potential to replace the oil economy, it is just a question of if the fuel can be produced efficiently and be sold at a practical price for people.
Fossil fuels come from fossilied plant matter in the ground. Alternative fuels are alternatives to fossil fuels, and these are mainly carbon fuels that take their carbon from carbon dioxide in the atmosphere (as fossil fuels do) but on a carbon cycle with a much shorter term. An example is wood, which can be burned as more trees are growing and absorbing carbon dioxide.
Hydrogen fuels could be an alternative if we come to a point where we can solve all the dangerous problems with hydrogen. Hydrogen fuels would be a good alternative but at this point and time hydrogen is way to unstable, so for now electric and ethanol are the way to go for an alternate fuel source.
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