Prepare for the Operating System Security Exam. Study with flashcards and multiple-choice questions, each with hints and explanations. Get ready for your test!

Adware primarily functions by displaying advertisements to users based on their data and behavior. This type of software gathers information about the user's browsing habits and preferences, which it then uses to deliver targeted ads, often in the form of pop-ups or banners. By collecting this data, adware can create a more personalized advertising experience, which is appealing to advertisers looking to reach specific demographics.

The operation of adware is typically tied to the model of providing free software in exchange for the user's attention to advertisements. While it does not usually cause direct harm to a user’s files or system, its presence can significantly affect system performance and user experience. In contrast to adware, the other options involve very different functionalities that do not align with the primary purpose of adware. For instance, encrypting files pertains to ransomware, monitoring network traffic relates to network analysis or surveillance tools, and providing free software licenses is more about software distribution practices rather than advertising mechanisms.