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This plugin allows encrypted conversations with people using clients with OTR capability as well. Enabling this plugin, an icon with a lock will be available in chat windows. It will allow to start OTR sessions. Before being able to start OTR sessions, you will have to generate a private key for each account. This operation can be easily performed in the plugin's configuration dialog.
OTR provides encryption and authentication (if the fingerprint of the other participant is accepted) but the messages aren't signed, so participant can deny the conversation.
Plugin offers four policies to decide when start sessions:
The wikipedia page about OTR has a list of clients that support it.