Unlocked multiplier means you can just adjust the CPU multiplier higher than stock. As you make the multiplier higher, the CPU runs faster.
Locked multiplier means the CPU multiplier is locked such that the highest multiplier you can choose is only the multiplier that comes at stock. The only way to overclock will be to adjust the base clock.
See
this sticky to learn how to overclock your i7.
EDIT:
Do i need it. Is it necessary
It is not necessary to have an unlocked multiplier to be able to overclock, but it makes it far easier to do so.