crypt does the same thing as the crypt C function. It provides one-way encryption, meaning that you can't actually decrypt the encrypted string. So, for example, say that you stored a password; then you want to test whether a password provided by a user matches that password that you've stored. In order to test that, you need to crypt the user-provided password and compare it against the already-encrypted password.

Make sense?

There are also a bunch of Crypt modules on CPAN that you may want to take a look at.