Encryption refers to algorithmic schemes that encode plain text into non-readable form or cyphertext, providing privacy. The receiver of the encrypted text uses a "key" to decrypt the message, returning it to its original plain text form. The key is the trigger mechanism to the algorithm.
Until the advent of the Internet, encryption was rarely used by the public, but was largely a military tool. Today, with online marketing, banking, healthcare and other services, even the average householder is aware of encryption.
Web browsers will encrypt text automatically when connected to a secure server, evidenced by an address beginning with https. The server decrypts the text upon its arrival, but as the information travels between computers, interception of the transmission will not be fruitful to anyone "listening in." They would only see unreadable gibberish.