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Please do a search. This has been covered time and time again.

Basically, an unlocked phone will allow you to use the phone with any GSM carrier around the world. Within the US, it will also let you use your phone with T-Mobile (if you're okay with edge data of course). Other than that, it also has a higher resale value than a carrier locked phone.
 
What does unlocking do?

Unlocking a GSM phone will allow you use your device on other carriers. In the US your only option would be T-Mobile, but overseas you will have plenty of other options.

This is good for someone who travels a lot, you can avoid expensive bills from your carrier for using your phone abroad.
 
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