The lock key is on the left side if you are looking at it from the front, and the mute key is on the right side. They are both on the top. If you hold down the mute key on the right..it will put it in standby. Even in standby mode the four keys on the top (send, end, apps, back) will still light up the screen, but none of the other keys will light up the screen like when its just locked.
Yes, Standy basically locks the phone but while it is in your pocket your backlight won't come on if you press any buttons. Saves on battery life. It also does a memory cleaning while in standby mode.