Locked phones can only connect to one provider's network; unlocked phones can connect to any network if they have the appropriate hardware. Unlocked phones allow users to switch between providers and use international networks.
Phone service providers sometimes sell locked phones at a discount, as they guarantee a user has to connect to one of their networks. Unlocked phones often cost their full retail price. Users can often unlock phones after a certain period of time with the original provider, but it's important to determine if a phone has the right hardware to connect to a new provider's network before making a switch.