Lock Screen does just that: it keeps the computer from being accessed and hides everything in the background except for the desktop. By default, it will try to both lock the screen and hide background processes, but by clicking the 'Lock' button instead of the 'Lock & Hide' button it will just lock the screen. In the future bulleted text echoing would be nice, and is possible with freeware OSAXen, but the ones available do not allow for customization of text entry modal dialog (plus then you have to have the right OSAXen to run Lock Screen...).
At one time, Keychain support existed in Lock Screen. It wasn't very good and was removed between versions 0.3 and 0.4. Here's some info on it: it doesn't work very well. If the password is always entered correctly, then everything is fine. If entered incorrectly, even once, then the Keychain will refuse to accept the password until it is manually entered into Keychain Access. If you get stuck, just force quite. By the way, when I refer to the password I mean the password for the active Keychain.
So, we're all probably better off now that its just entering the password during run time.
THIS IS NOT A SECURE SECURITY SYSTEM!!!!! DON'T GET UPSET IF SOMEONE SUBVERTS IT, BECAUSE IT IS *VERY* EASY TO DO!!!!! IT'S NOT MY FAULT IF SOMETHING BAD HAPPENS!!!!!