In this case I am not referring to breaking out of prison and becoming el fugitivo. Although, under current law use of the Jailbreak software can land you in considerable legal trouble.
Jailbreak is a tool used to modify the iPhone OS so the rightful owner of the device may load any third party applications they like on it. Out of the box an iPhone is restricted and will only allow the owner to download apps from the Apple app store. This is a handy way to eliminate competition in the market place.
In real life, what Apple is doing would be like if someone went to Sears and bought a shiny, red Craftsman toolbox and brought it home. Once home the owner tries to put his own tools in the toolbox but finds he can't. Frustrated, the owner of the toolbox gets out the paperwork to figure out what the hell is wrong with his toolbox.
After hours of cursing and fumbling around with the instructions the owner gives up in frustration. The owner's wife picks up the sales contract and points out the problem there in the fine print: You can only put Craftsman tools in your toolbox. If you modify the toolbox to accept other tools you are going to jail. And what's more is, to pull the limitations of only doing business with AT&T into the equation...you can only use your toolbox to carry tools to places in a Ford truck.
Seem silly? It is a pretty accurate metaphor.