If you want to browse the Internet anonymously, then Tor is best solution for you.
If I understand good, your packets are encrypted, and sent to relay proxies, which then decrypt packets and send them on right place.
In todays the Internet closing, like in Iran or China, or, as much as I know, USA's spy on the Internet traffic (try to contact Osama Bin Laden over the Internet and soon CIA agents will knock on your door probably ), or if you just want to visit porno sites on your job,ĂÂ tool like this is neccessery.
It look like surfing the Internet is a bit slower, when I hit google I got Italian instead of Slovenian (it depends on what relay are you attached), and I tested it ONLY from FireFox, and SmartSniff, but it is working.
Before using it, read what Tor does and does not do for you, to be shure that you are protected, and enjoy in your anonimity