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This adds the "transit" logical (secret) backend. It is used for encryption and decryption of values in transit, and does not actually store the values. It is used by creating a named policy, such as "oauth" by writing to "policy/oauth". This creates a named encryption key (currently defaults to 256bit AES-GCM).
Clients can then use the "encrypt/oauth" and "decrypt/oauth" endpoints to encrypt and decrypt data respectively.
The use case for this is to allow Vault to manage the encryption keys, but allow clients to perform cryptographic operations. For example, web servers can encrypt oauth tokens and store the cipher text in a database. When the token is needed, it flows through Vault to be decrypted and then used. This means the web servers never have access to the encryption key, the plaintext oauth token is only available in transit (hence the name), but is stored encrypted at rest.