When a phone is unlocked... say you have ATT
and your phone was bought at ATT. Now let's say
You choose to switch to T-Mobile but you love
your current phone and don't want to switch to
a T-Mobile phone. You can UNLOCK it so it's no
longer exclusive to ATT use only.
You are now able to use that phone for any other
company that uses SIM Cards.
There is a similar concept to Verizon/Cricket/Sprint
phones but it's called FLASHING since they don't
use SIM Cards.