Flashing and unlocking are two terms commonly heard when discussing cell phones and carriers. Many people think they are the same thing but, in fact, flashing and unlocking refer to two different processes for two different technologies, but they both offer the same result.
Two different major technologies in the world exist for cell phones: CDMA and GSM. The vast majority of the world uses GSM, which uses a SIM card that is locked. Carriers that use CDMA have their information stored directly in the phone programming, with no external SIM card. The United States uses about 50 percent CDMA and 50 percent GSM.
Unlocking is used with GSM technology and allows you to take your phone with you to a different GSM network. Entering an unlock pass code into the phone permits you to put a different carrier's SIM card in the slot.
Since CDMA phones do not use SIM cards, you "flash" the firmware with the new carrier's information. You must have a cable to connect your phone to a computer and use flashing software. Many people take their phones to a professional CDMA flasher in order to change carriers using CDMA technology.
In 2006, the US Digital Millennium Copyright Act (DMCA) legalized computer programs designed to make you able to take your phone with you when you switch carriers. Prior to that, you could not keep your same phone if you wanted to go to a different network.
You cannot use a GSM phone with CDMA carriers or CDMA phones with GSM carriers, even if they are unlocked or flashed.