How FlashCrypt works is very simple, when you install it you will see the encryption option in the context menu (right click with the mouse on any folder icon). If you select that option, you will see the few configuration options, and it will ask you for the password you want to use. Once you have filled in everything, the program will take care of encrypting the files so that nobody can access them without knowing the password.
When you have an encrypted folder, it will show the FlashCrypt logo on top of the normal icon, so that you can know that it is encrypted. If you download FlashCrypt for free, you will also be able to easily decrypt any file by simply clicking on it. Before opening it, it will ask you for the password, and if you know it, it will start decrypting the folder.