Chapter 2 of 'Understanding Cryptography' discusses stream ciphers, their comparison with block ciphers, and the importance of random number generators (RNGs) in cryptographic systems. It explains concepts such as one-time pads, linear feedback shift registers, and a modern stream cipher called Trivium, highlighting their security properties and application challenges. The chapter emphasizes that while stream ciphers may require fewer resources, they are generally less popular than block ciphers in internet security.