Absolute timelocks
An absolute timelock says: not before this block height or this date. A whole transaction can carry one in its nLockTime field, and since 2015 an output can enforce one in its script with OP_CHECKLOCKTIMEVERIFY.
Relative timelocks
A relative timelock says: not before this many blocks after the output was confirmed. It arrived in 2016 with OP_CHECKSEQUENCEVERIFY. It is what lets a Lightning channel give the other side a window to react before funds of a force close can be spent.
- Inheritance: a backup key that only works after a long period without activity.
- Vaults: a delay during which a suspicious withdrawal can be cancelled with another key.
- Lightning: penalty windows and the safety of routed payments.