What is phone "unlocking", and what is the controversy surrounding it?

I've been hearing a lot lately about phone companies having legal issues about phone "unlocking", but I have no idea what they are talking about. I'm usually really good with tech stuff, so I'm a bit embarrassed to ask my tech-minded friends about it. Could anyone here help me out? Thanks!
Unlocking a phone enables the owner to use the device with any wireless carrier that the device is capable of working with [1, 2]. This is sometimes known as "unlocking the SIM," which stands for subscriber identification module [1]. The Library of Congress recently announced that it would make it illegal to unlock phones in the United States [2]. This means that phone companies will be able to charge more for phones that are not unlocked [2]. Critics of the move say that this will stifle competition and innovation [2]. 
Phones are generally locked by the cell phone carrier, which is the company that provides the phone service, in combination with the manufacturer of the phone [1, 3]. There are many reasons that a cell phone company may choose to lock a phone, but the primary reason is to prevent customers from jumping from one carrier to another too frequently [2]. The cell phone companies argue that allowing customers to unlock their own phones will encourage them to switch carriers and undermine the subsidy model as a whole [2]. Critics of phone locking argue that there is no need for any restrictions whatsoever, because phones are a customer's "private property" and because unlocking their phone doesn't release consumers from the contract they have signed but simply allows them to use them on other networks as well [1]. Nonetheless, with some notable exceptions (T-Mobile), current law requires that customers request that their carrier unlock their phone, and there are several requirements that customers must meet before their carrier will unlock their phone [3]. 