Two distinct uses of "escrow" in California real estate:
Transaction escrow: During a purchase, escrow is the neutral third party that holds deposits, documents, and closing funds, ensuring the transaction closes atomically — buyer gets title, seller gets money, lender records the lien, all at the same moment.
Impound / escrow account: Post-close, many loans require you to pay 1/12 of annual property tax and homeowners insurance with each monthly mortgage payment. The lender holds that money in escrow and pays the bills when they come due. Required on FHA, VA, and low-down conventional loans. Optional on higher-equity conventional and many jumbos.