Unlocking a phone, what's it all about?

[squeezewax]

I recently got my first mobile phone[yeah i'm late] and i'd like to know what unlocking a phone means?
I was looking online for a manual for my particular phone when i first came across the term. I saw an ad saying that for a couple of bucks a code will be sent so i could unlock my phone, but it didn't say why i should do this or what it was all about?

 

[Milgrim]

A locked phone is set up so that it can only be used with one cell service provider. It won't work with another company's sim card. If you have it unlocked, it removes that limitation.

 

[Bubzeh]

Have I gone back to 2010?