What is iPhone unlocking?
Unlocking an iPhone is the process of removing SIM (Subscribers Identity Module) restrictions thereby giving you the chance to use your iPhone in any carrier. This is the main reason why do you need to unlock your iPhone. If you are satisfied with your carrier right now and is not planning to bring your phone abroad, then there is no need to unlock.
There are two methods in unlocking an iPhone, the software and hardware unlocking. Software unlocking can be done easily and is safer to use since iTunes can restore your iPhone back in case something will happen unexpectedly. Soft unlock are being developed by the Dev Team, which are freely distributed. Read the post regarding iPhone unlocking. If you want to unlock your iPhone, you need to jailbreak first.
What is jailbreaking?
Jailbreaking is the process of modifying your iPhone iOS to allow unsigned code to run and gain access to files that Apple wouldn’t normally let you access. It adds unofficial application installers to your iPhone, like Cydia and Installous. This enables you to download third-party applications, cracked apps, and unapproved apps (or tweaks) which enhance your iPhone’s capability.
Although Apple doesn’t encourage anyone to jailbreak their iPhones or any iDevices as it will “void” the warranty, the process is reversible via iTunes by just restoring. It’s impossible for them to see if you jailbroke your iPhone in the past after restoring.
To make the difference between unlocking and jailbreaking so simple, let me put it this way: unlocking an iPhone means you can use any SIM cards to work while jailbreaking an iPhone means you can install third-party apps/tweaks aside from Apple developers.