Binarize is a model / world optimizing tool.
The purpose of the tool is to convert the file into the representation suitable for fast loading by the game engine. Some information important for editing, but not relevant for the game, may be discarded during the process, therefore the process in not always reversible (which is one of the reasons why BI does not provide a tools which would reverse the binarization).
Notes: The term 'binarizing' is sometimes used to describe converting a file into an optimized / binary format, like when converting Config.cpp into Config.bin. This is in fact not done using Binarize, rather by another tool called CfgConvert.
Some people mistake binarizing to encryption, this is not true. It has nothing to do with encrypting the models.
Unbinarized model is in MLOD format. Binarized model is ODOL format. You cannot edit ODOL format p3d files, so please be careful not to delete your source MLOD models. At the present time there is no ODOL → MLOD converter for ArmA released.
The easiest way to use binarize is to run BinPBO and tick the Binarize tickbox, then just press Pack button and your chosen addon source directory is binarized and packed into PBO, ready to be used ingame.
Binarize creates <addon>.log file which has all kinds of “good” information about your models, mostly this info is warnings and errors in your models :)