Tor (The Onion Router, "Onion Router") - an open, anonymous network consisting of thousands of servers located around the world and supported by volunteers. The data transmitted through the network path are composed of three random nodes; the data is further encrypted on each node. Validity path is 10 minutes, after which a new is randomly generated.
None of the network node on the network knows both the address of the sender and the recipient, the nodes don't see contents of the package contents of the package. Upon reaching the outlet (end) node data is decrypted and sent to the recipient.
Restoring the entire chain and keep tracking the user is very difficult. This provides a high level of anonymity and to protect the transmitted data from third parties
The Service Provider does not see what resources users are visiting and therefore cannot collect statistics for them, to block, to implement their scripts, toolbars, etc. Resources to visit a user can not see the real IP address of the user, they see the address of the last (output) node chain through which data is passed.
Also, the use of the Tor network allows access to the unlocked services.
Disadvantages of Tor-Network
As mentioned above, the output node of the data is not encrypted and can be used by any individual or organization that owns the output node.
User traffic at the endpoint goes through several network nodes that are geographically spaced apart and have different physical network connection channels, which will limit the ultimate speed (in some cases much).
Tor is ill-suited to bypass geo-restrictions. Since the requests passes through a random chain of Tor-nodes, the user can pre-select which country will be located off site.
Many online resources are actively struggling with the Tor, holding up the IP address of nodes in the black list, not allowing users of the network to use their services. Also, a number of Internet service providers are attempting to detect the use of Tor-network for their users and complicate their connection to the network.