At its core it uses free libraries to provide a large collection of algorithms to choose from, many of which were finalists for the AES competition.
The following cryptographic algorithms are currently supported on both desktop and Android systems: AES (and other Rijndael variants up to 256 bits), Serpent (128, 192 and 256 bit variants), Blowfish (128 bit) and Twofish (128 and 256 bits), as well as (Triple) DES.
And the following one-way hash algorithms are common to all systems: TIGER, SHA1, the SHA2 variants (256, 384 and 512 bits), and MD5.
In an effort to make encrypt even more useful to even more people, it's been written to use the compatible encryption libraries by the GNU Project: libgcrypt and gnu-crypto. This allows many different algorithms to be chosen from on both Android devices and desktop systems.
The permissions requested are READ_EXTERNAL_STORAGE, WRITE_EXTERNAL_STORAGE, and WAKE_LOCK; obviously you need the first two if you want to encrypt/decrypt files stored on your device, and the wake lock stops the OS putting encrypt to sleep before it's finished.
For more information visit https://albinoloverats.net/projects/encrypt
This is the free (ad supported) version - it has all of the same features and abilities as the paid for version, but with the addition of adverts.