An escrow account is a neutral holding account managed by a third party (the escrow agent). Money or assets are deposited into this account and released only when all pre-agreed conditions of a transaction are met. It protects both the buyer and seller.
The most common use: real estate transactions. When buying a house, your earnest money deposit goes into escrow. The escrow agent holds it until the inspection passes, financing is approved, and all paperwork is complete. Then the money is released to the seller, and you get the keys.
Escrow accounts are also used for mortgage payments (property taxes and insurance), online marketplace transactions, mergers and acquisitions, and legal settlements. Your monthly mortgage payment often includes an escrow portion — the bank collects a little each month and pays your property taxes and insurance on your behalf.