An algorithm that turns messages or text into a fixed string of digits, usually for
security or data management purposes. The "one way" means that it's nearly impossible to derive
the original text from the string.
A one-way hash function is used to create digital signatures, which in turn identify and
authenticate the sender and message of a digitally distributed message.
A cryptographic hash function is a deterministic procedure that takes an arbitrary block of data and
returns a fixed-size bit string, the (cryptographic) hash value, such that an accidental or intentional
change to the data will change the hash value. The data to be encoded is often called the
"message," and the hash value is sometimes called the message digest or simply digest.
The ideal cryptographic hash function has four main or significant properties:
it is easy (but not necessarily quick) to compute the hash value for any given message
it is infeasible to generate a message that has a given hash
it is infeasible to modify a message without changing the hash
it is infeasible to find two different messages with the same hash
Cryptographic hash functions have many information security applications, notably in digital
signatures, message authentication codes (MACs), and other forms of authentication. They can
also be used as ordinary hash functions, to index data in hash tables, for fingerprinting, to detect
duplicate data or uniquely identify files, and as checksums to detect accidental data corruption.
Indeed, in information security contexts, cryptographic hash values are sometimes called (digital)
fingerprints, checksums, or just hash values, even though all these terms stand for functions with
rather different properties and purposes.
Source:
TIPTON, Hal, (ISC)2, Introduction to the CISSP Exam presentation.
and
http://en.wikipedia.org/wiki/Cryptographic_hash_function

Explanation/Reference:
Reference: https://csrc.nist.gov/csrc/media/publications/conference-paper/1999/10/21/proceedings-of-the-
22nd-nissc-1999/documents/papers/t09.pdf (11)

In cryptography, you always assume the "bad guy" has the encryption algorithm
(indeed, many algorithms such as DES, Triple DES, AES, etc. are public domain). What the bad
guy lacks is the key used to complete that algorithm and encrypt/decrypt information. Therefore,
protection of the key, controlled distribution, scheduled key change, timely destruction, and several
other factors require careful consideration. All of these factors are covered under the umbrella
term of "key management".
Another significant consideration is the case of "data encryption as a method of protecting data" as
the question states. If that data is to be stored over a long period of time (such as on backup), you
must ensure that your key management scheme stores old keys for as long as they will be needed
to decrypt the information they encrypted.
The other answers are not correct because:
"It should sometimes be used for password files." - Encryption is often used to encrypt passwords
stored within password files, but it is not typically effective for the password file itself. On most
systems, if a user cannot access the contents of a password file, they cannot authenticate.
Encrypting the entire file prevents that access.
"It is usually easily administered." - Developments over the last several years have made
cryptography significantly easier to manage and administer. But it remains a significant challenge.
This is not a good answer.
"It makes few demands on system resources." - Cryptography is, essentially, a large complex mathematical algorithm. In order to encrypt and decrypt information, the system must perform this algorithm hundreds, thousands, or even millions/billions/trillions of times. This becomes system resource intensive, making this a very bad answer.
Reference:
Official ISC2 Guide page: 266 (poor explanation)
All in One Third Edition page: 657 (excellent explanation)
Key Management - Page 732, All in One Fourth Edition

NSA took the 128-bit algorithm Lucifer that IBM developed, reduced the key size to 64 bits and with that developed DES.
The following answers are incorrect:
Twofish. This is incorrect because Twofish is related to Blowfish as a possible replacement for DES.
Skipjack. This is incorrect, Skipjack was developed after DES by the NSA .
Brooks-Aldeman. This is incorrect because this is a distractor, no algorithm exists with this name.