Encryption is the process of rendering your information unreadable without a 'key' (an encryption key). Encrypting helps protect your sensitive information, should your laptop or other data device be lost or stolen.
There are many types of encryption - whole disk, select files, in transit - so your choice of encryption solution will depend on your needs. Wikipedia maintains a full comparison of top competitors with their features showing just how many options there are to choose from. The tables show you which options work for each operating system as well as the variety of features.
Did you know that your Mac has whole-disk encryption built right in? If you are running OS X Mountain Lion, you can turn on encryption simply and easily. As part of the standard security for OS X, FileVault 2 encrypts the entire drive on your Mac, protecting your data with XTS-AES 128 encryption. It can also encrypt any removable drive, helping you secure external drives. While this may be your 'basic' option for encryption, there are of course other options that you can choose from.
If you have a PC, encryption is even more varied, depending on your needs. A PC encryption option of about the same level as FileVault 2 would be TrueCrypt.
Of course, if your laptop does go missing, be sure you have LoJack for Laptops to delete your sensitive data and lock your device while our Recovery Team attempts to recover it. Although encryption is a great data protection measure, it is not perfect and can't help get your device back!
Do you use encryption? Why or why not?