An unlocked phone is compatible with SIM cards from any network, so you can freely switch between SIM Only deals on different networks without needing to change your handset.
Some phones, especially those that are included with monthly contracts, are ‘locked’ to a specific network and will only work with SIM cards from that same network.
This makes it harder to switch to a SIM Only contract from a different network further down the road.
If your phone is locked, you can call your network and have the phone unlocked for use with any SIM.
Be aware that many networks will charge you to unlock a handset (ranging from £9 to £20) and require you to have completed the minimum term of your contract.