When applied to technology, the word vanilla means “ordinary, default, unmodified”. When specifically applied to gaming, it means the default game, without any add-ons.
Shaeldon speculated that this meaning might derive from vanilla ice-cream being the first and still the most frequent flavour. No. 7892142 hinted at a sexual meaning. They’re both right: the Online Etymology Dictionary has this to say about vanilla:
1660s, “pod of the vanilla plant,” from Spanish vainilla “vanilla plant,” literally “little pod,” diminutive of vaina “sheath,” from Latin vagina “sheath of an ear of grain, hull of a plant” (see vagina). So called from the shape of the pods. European discovery 1521 by Hernando Cortes’ soldiers on reconnaissance in southeastern Mexico. Meaning “flavoring extracted from the vanilla bean” is attested by 1728. Meaning “conventional, of ordinary sexual preferences” is 1970s, from notion of whiteness and the common choice of vanilla ice cream.
Etymological dictionaries tend to work in reverse chronological order, as they describe where words come from. So let’s recast this. A Latin word for a sheath, scabbard, or the hull of a plant was inherited into Spanish, where a diminutive (“little pod”) was applied to a certain plant. That plant name came into English where the meaning was expanded to include the flavouring extracted from the beans of the plant.
As this flavouring was the default in ice-cream, it was expanded metaphorically to refer to “conventional” or “ordinary” sexual preferences (i.e., non-BDSM) and from there to various other meanings of conventional, default, or ordinary. It is now particularly prevalent in technological circles.*
Incidentally, yes, the word vanilla is etymologically related to vagina but this is, in fact, completely unrelated to this usage. They developed independently.
* This, at least, is my experience. In fact, this use of vanilla is found in all sorts of contexts, but in my personal experience the two most prevalent contexts are the original (sex) and technology.
I spend far more of my time on English Language & Usage than I do on Arqade.