Questions about variable modifiers

Can someone clarify something because the documentation is not very clear.

First, what exactly does :form_prep do?

It tells me it makes content safe to use in a form. As HTML injections safe? Is this better than the build in EE sanitization, or how does it differ?

Also, why does it say on the decryption and encryption modifiers:

Custom encryption key to use. Allows you to potentially share encrypted data with another party without having to compromise your ExpressionEngine installation’s primary encryption key.

But this makes no sense to me because it’s talking about Base64 encoding. That is not secure or even encryption. Its only to handle data submission for binary files. Encoding is not encryption.

I’m missing something here?