Introduction
This documentation is not guaranteed to be error-free and is provided "as is" without warranty of any kind. For more information, see Disclaimers.
Let's suppose that there is an .avi video file stored on a TrueCrypt volume (therefore, the video file is entirely encrypted). The user provides the correct password (and/or keyfile) and mounts (opens) the TrueCrypt volume. When the user double-clicks the icon of the video file, the operating system launches the application associated with the file type – typically a media player. The media player then begins loading a small initial portion of the video file from the TrueCrypt–encrypted volume into RAM (memory) in order to play it. While the portion is being loaded, TrueCrypt is automatically decrypting it (in RAM). The decrypted portion of the video (stored in RAM) is then played by the media player. While this portion is being played, the media player begins loading another small portion of the video file from the TrueCrypt–encrypted volume into RAM (memory) and the process repeats. This process is called on-the-fly encryption/decryption and it works for all file types (not only for video files).
Note that TrueCrypt never saves any decrypted data to disk – it only stores them temporarily in RAM (memory). Even when the volume is mounted, data stored in the volume remains encrypted. When you restart Windows or turn off your computer, the volume will be dismounted and files stored in it will be inaccessible (and encrypted). Even when the power supply is suddenly interrupted (without proper system shutdown), files stored in the volume remain inaccessible (and encrypted). To make them accessible again, you have to mount the volume (and provide the correct password and/or keyfile).