Most multisignature escrow wallets require at least two different signatures to move funds, although there is no real limit as to how many signatures are required to sign off on transactions.
It is an address which is signed off by both the buyer and the seller (vendor) with their respective private keys. The buyer sends the package cost to the escrow and the seller ships the products. If both the parties are satisfied, the seller and the buyer sign off on the address and the funds are sent to the vendors account.
Expanding this logic of escrow account, the board of directors of a company can use multi-signature wallets to control the funds of the company in a more democratic and consensual way. For an increasing number of members on the board, the authorities can opt for wallets that require even more signatures, such as 4-6 wallets.
perhaps the most common use, however, is multi-sig escrow. Commonly used on ebay-style peer-to-peer marketplaces which accept btc payments, such as the deep webs infamous dark markets, multi-sig escrow provides consumer protection without the need to trust a central escrow provider to hold the coins on your behalf.
i headed over to silk roads message board, and posted about a feature that at the time, almost nobody knew about multi-signature escrow. As recently as last november, almost nobody had ever heard of it. I declined to start using silkroad 2, and resolved to write my own system.
multisig is short for multi-signature, a lock that only opens with enough keys, out of a set of predefined keys. Lets say that alice, bob, and charlie all want to open a business together and invest some of their money. For obvious reasons, none of them actually want only one person to have the private keys to this money.
The simplest type is an m-of-n address - it is associated with n private keys, and sending bitcoins from this address requires signatures from at least m keys. A multi-signature transaction is one that sends funds from a multi-signature address. The primary use case is to greatly increase the difficulty of stealing the coins.