Why encrypt in the browser
A password tool is exactly where uploading is least acceptable: to protect a document you would first have to hand it, unprotected, to someone else's server. Here the file is encrypted on your own device and the password is used there and then discarded, so there is nobody to trust with either.
What the password does
Anyone who opens the file must type it. The contents are encrypted with AES-256, so without the password the document is unreadable rather than merely hidden. Pick a long passphrase: encryption is only as strong as the password guarding it, and a short or common one can be guessed.
Restrictions are not security
You can also ask viewers to block printing, copying or editing. Those are flags that well-behaved readers honour and that anyone with the right tool can remove, so treat them as a deterrent. They are off by default; the password is the protection.
Taking it off again
The Unlock PDF tool removes a password when you supply it. There is no way to recover a forgotten one, so keep the original unprotected file until you have checked the protected copy opens.