A safe is an encrypted file with passwords and data. This file has the extension .psafe3 and is compatible with other apps, including pwSafe for iOS and Password Safe. A safe is said to be "locked" when it's unloaded from computer memory and in need of a password to be accessed again. Likewise, an "unlocked" safe is ready to be used. Safes lock automatically after a while.
Every safe is fully encrypted using a user-definable password. This password is the only way to access your data. If you forget it, there is no other way to recover your data other than try every possible password (a technique known as brute-force). This also means that if an unauthorized person somehow gets hold of a safe, there's isn't much he or she can do.
From Wikipedia: "In cryptography, encryption is the process of transforming information (referred to as plaintext) using an algorithm (called a cipher) to make it unreadable to anyone except those possessing special knowledge, usually referred to as a key."
pwSafe uses the Twofish algorithm for encryption. Twofish is a 256-bit algorithm which was one of the five finalists of the AES competition (won by Rijndael algorithm). If you wish more details, that's the technical description of pwSafe's file format.
An entry is where login details for one website or app is stored into. It includes a title, an username and a password, along other optional information like email address, URL (web address) and a notes field. On pwSafe, entries are shown with a small person icon:
A group is a collections of entries in the same sense a folder is a collection of file in a computer. Just like folders, groups can also be nested inside other groups. On pwSafe, groups are shown with an icon consisting of two small persons:
When generating new random passwords, pwSafe follows a set of user-definable rules. This rules include the password length and types of characters that it must contain. Password policy can be defined for the safe and overridden for any specific entry.
Every time a password is changed, pwSafe has the capability to store its older version for reference purposes. You can configure this feature safe- or entry-wise, as well as viewing it directly by clicking the clock icon next to the password field.
iCloud is an online service from Apple which pwSafe uses to synchronize safes across iOS devices (iPhones, iPads and iPods) and Macs. iCloud is not to be confused with iCloud.com website, which only shows iCloud stored data for Apple apps.