littlebuddha wrote:How does it work? What is/are the used technique(s)?
Perhaps this file can shed some light on your questions: http://gitorious.org/owncloud/owncloud/blobs/master/apps/files_encryption/lib/crypt.php
littlebuddha wrote:What happens to the encrypted files/folders if you want to share it/them with someone who is/isn't part of OwnCloud?
AFAIK sharing with encrypted files is not supported at the moment
We are working on it. If you enable encryption, sharing is disabled.
If you would like more info, drop by on IRC (evening Europe time is best usually) and ask around.