The mechanism that lets strangers trade
Escrow is the reason a buyer who has never met a vendor can pay first and still get the goods. The multisig version holds the coins in a script that needs two of three keys to spend, and the difference from a plain escrow is the part the market cannot do alone.
The plain version
A plain escrow is a third party that holds the money until the buyer confirms. The third party is the trust, and the trust is the problem, because the third party can be slow, can be biased, and can be gone. The buyer pays, the vendor ships, and the whole arrangement rests on the third party doing the right thing at the right time.
The multisig version
The multisig version replaces the third party’s judgement with a rule. The coins sit in a script that needs two of three signatures, the buyer’s, the vendor’s and the market’s. A clean order is buyer plus vendor, so the market is not in the loop at all. A disputed order is where the market’s key comes in, and it is the tie breaker, not the referee. The escrow page has the full mechanics.
What it does not cover
It covers the space between payment and delivery. It does not cover a balance left in the wallet after the order closed, and it does not cover a vendor who shipped the right quantity of the wrong grade. The escrow sees that a sum left the script. Whether what arrived matches the listing is a judgement the buyer makes before paying, not after.