Rather than being a theory unto itself, Freud uses the iceberg is as an explanatory tool for his theory of the conscious and unconscious. In essence, Freud explains his theory topographically through the use of the iceberg as a dominant metaphor.
Freud believed that much of what defines human behavior, including impulses, urges, thoughts, emotions and feelings, comes to the individual person in ways that she in not entirely cognizant of. Instead, said phenomena are produced or issue from a realm of being he termed "the unconscious." However, according to Freud, there is a smaller region from which we can actively receive and analyze information in our conscious, waking mind. This small part is what actually controls the traits and behaviors typically labeled personality.
Because of this theoretical separation between the small definable portion of being and the large, uncontrolled subconscious portion, Freud offers the topographically apt analogy of the iceberg, where the tiny visible portion at the top obscures the size and power of the submerged aspect. In technical Freudian terms, the portion nearest the surface of the water -- personality -- is called the ego. Just below the ego, nearing the bottom, is the superego, the part of a person's interiority that offers moral or social restraint against the unknown, unauthorized impulses of the subconscious. Finally, the greatest portion of the hidden mass is the id, the darkest, most recessed province of human thought, motivation and desire.