LastPass works, much like other password managers, with a single master password concept. Once you've logged into your LastPass Vault, then the software will help you access other previously visited sites using the saved password.
When surfing to a new web site, the browser add-on or app will log you in automatically. Alternatively, the login form can be completed automatically for you, but you choose whether to submit the form to access the site.
The software stores passwords on the LastPass server. This is unlike many other password managers which typically choose to store passwords on a cloud-based file sharing service like Dropbox. For the less experienced, the latter setup is harder to get to grips with, whereas setting up with LastPass is pretty painless by comparison.
There may be concern about data transparency because the information is stored outside of a public cloud storage system, however passwords are encrypted by the software before they are transmitted over the net.
With the login, you can choose whether to have LastPass prompt you with your email address used on your LastPass account or to leave the login form blank and complete it new each time, if you're really paranoid!
There are other useful options that let you get specific with individual sites. You can force a repeated entry of the master password for sites that are highly sensitive, like a bank account or e-commerce site such as Amazon.com. That way, if you're logged in to the vault, but step away from your computer and forget to lock it, you'll not have your online accounts wiped out. A thoughtful extra.
Free Version and Limitations
The free version of LastPass runs on Windows, Mac and Linux. The main features are secure password encryption & storage, automated login, automatic form filling and random password generation for new sign-ups. You can access backups of your own passwords and also upload saved password lists downloaded from other password managers too. The free version does have an ad-supported interface, but for people who dislike that, they can always upgrade to the premium version.
The premium version of LastPass offers access to many mobile app versions of the software, so you can use it with your smartphone or tablet of choice. There is an app for the Apple iOS, Android, Windows Phone, Blackberry, Symbian, and HP WebOS.
There are also a couple of extras in the premium package including multi-factor authentication via YubiKey USB support. This is a USB device that plugs into your computer to confirm that the real owner of the account is present; without it, you cannot access your password vault.
LastPass also bought out Xmarks, the web browser favorites cloud storage add-on, and this is available as a discounted premium bundle, which is nice.