The Rail Fence Cipher is an encryption algorithm that jumbles up the order of letters in plain text based on a user-entered key. It works by writing the plaintext into zigzag lines across multiple rows, determined by the key value. The process involves writing the letters diagonally down to the right until reaching the number of rows specified by the key, then returning to the first row. This continues until the end of the plaintext is reached. The decryption process involves reconstructing a diagonal grid using the encrypted message and replacing dashes with corresponding letters to read off the text.