XOR is a simple bitwise operation that computes the exclusive OR of bits in a sequence.
0 XOR 0 = 0
1 XOR 1 = 0
0 XOR 1 = 1
1 XOR 0 = 1
If M is a message (like the key you pressed) and K is a secret key (the byte negotiated during the handshake), then V = M XOR K is an encrypted version of M. V XOR K gives you M back. This is simple symmetric encryption.
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Symmetric encryption with a persistent key is easily crackable by observing enough messages, having a 256-bit key makes it even easier. Real messaging systems use public key encryption to negotiate a symmetric one-time key that is re-chosen for each message. That way the expensive public key encryption is only used on a small (~160 bit) key, instead of the entire message (slow!). Symmetric encryption is then used on the message (fast!), but the key is only used once so there can be no long term attacks.
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