Chapter 3 of 'Cryptography and Network Security' covers classical encryption techniques, emphasizing key concepts such as plaintext, ciphertext, and various encryption methods including substitution and transposition techniques. It discusses the principles of symmetric and asymmetric cryptography, cryptanalysis, and brute-force attacks, alongside examples like the Caesar and Vigenère ciphers. The chapter highlights the importance of strong encryption algorithms and keys, and the challenges associated with implementing them securely.