Escrow basically works like this: you don't trust the person you're trading with enough to outright trade with them so both instead trust a third-party. One party stores whatever their trading (in this case BTC) with the third-party while the other party sends their good/service/money etc. From here, if both sides agree then the BTC is released from the third-party to the party meant to receive. However, if there is a dispute then arbitration occurs with the third-party deciding who is correct and who should receive the BTC.