Many mobile phones are designed to use a Subscriber Identity Module (SIM) card to store subscriber data. These SIM cards are issued by the carrier and provide voice & data service to the phone. "Locked" mobile phones will only recognize SIM cards from the carrier that originally provided the phone. Almost all mobile phones provided by local carriers are locked to that carrier’s network and cannot be used on other networks.
"Unlocked" mobile phones can use SIM cards from any carrier that supports the phone's operating frequencies. This makes them more convenient for switching carriers & traveling abroad. As many carriers also require customers to purchase pricey 2-year data contracts with new smartphone purchases, buying an "unlocked" phone can also be cheaper in the long run, as it allows customers to use "pre-paid" and "no-contract" SIM-card options or to switch to a new carrier when a cheaper, better plan becomes available.