Encryption methods are a huge topic, complicated by the fact that Notes/Domino use different methods in different
parts of the products. For example, the encryption used to hide network traffic between Notes and Domino is different from the encryption used to sign an email message.
For all encryption methods though, there is the concept of a "key" (or set of keys). The key is used to unscrambled an encrypted message to recover the original message. The longer the keys are, in general, the more secure the method is. So a 128-bit encryption scheme uses a key that is 128 bits long. Divide this by 8 bits per byte and you get 16 bytes. So in this scheme a key could look like this "ChuckConnell1234" -- 16 characters. Why 128 and not 127 or 255? Just convenience. Numbers that are a power of 2 are easier to work with in a computer.
If you want to know more, I suggest the following article that I wrote recently about email security.
And here is a link to a general encryption primer:
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