SSL (Secure Sockets Layer) issued by a trusted authority such as RapidSSL or GeoTrust is installed on your domain's hostname i.e. secure.domain.com. When there is a client of yours that browses over https://secure.domain.com the connection between the browser and the server is encrypted with 128, 256 bits key. Any data send between your client's browser and the server is encrypted before sending and decrypted after received on the server.
This way information transmitted over the Internet is encrypted and signed as secured by this trusted authority. The browser checks the validity of the SSL Certificate with the issuance authority when sending data over https://. SSL technology protects your website and makes it easier for your visitors to trust you.