Encryption is a process that converts plain text into ciphertext through the use of cryptographic algorithms and encryption keys. There are two main types of encryption: symmetric encryption which uses the same key for encryption and decryption, and asymmetric encryption which uses a public key for encryption and a private key for decryption. Common symmetric encryption algorithms discussed include DES, Triple DES, AES, Blowfish and Twofish. Asymmetric algorithms include RSA. Other algorithms mentioned are IDEA, MD5, and FPE. The document also discusses how encryption keys are used and changed in Magento.