Hi Albert,
There are two ways Encryption works here.
1) You can encrypt a field or a section of a form, this means that only users that have the provided key can see the contents in those fields or sections. When a field is encrypted a user that has access to the document, but does not have the key, cannot look in the document properties and see the contents of the underlying field. So you could have a document with technical documentation as well as stored credentials within the document as well, but only users with the key see the credentials.
2) Database Encryption - This is the encryption you see in the Database Properties dialog box. This Encrypts the .nsf file on the local computer, so that if your laptop is stolen, the new "Owner" of your laptop cannot just open up the .nsf with any notes ID. They would have to guess the password on your ID, which is the one you would use to encrypt it. This will also prevent you from having someone sned you a copy of the ID from their laptop, via email or USB, which was encrypted with their ID. you ID, even though you are in the ACL, will not be able to open the DB due the encryption.
Final Note - DO NOT ENCRYPT DATABASES ON THE SERVER
Walt