'Encrypt contents to secure data' - means what?

Right click on a folder in XP, select Properties, select Advanced - and one of the options is 'Encrypt contents to secure data'. How, exactly, is the folder and its contents encrypted? Who can, and cannot access the data, under what circumstances? No passwords are required...

For instance - suppose you wanted to save a folder on an external service - even your gmail account, as a free, limited and no-frills option - what difference to your uploaded data's security would this kind of encryption make?

 

Mmmmn - thanks Pete - doesn't look very useful then for a solus user (even with XP Pro), thinking of uploading some files for safekeeping. Sounds more relevant in a multi-profile/multi-user environment, perhaps with a central server.

I need to explore further on behalf of a friend who keeps some sensitive data on his machine, whom I'm recommending to store it off-site for safekeeping...
David

 

I write data to DVD and save in local bank safe deposit box.

 

I doubt he's organised enough to do that. I also have to explain to him each time how to save his stuff to CD....