Which of the following best describes a software firewall's function?

A software firewall functions primarily by monitoring and regulating both incoming and outgoing traffic on a computer or network device. This regulation helps to protect the system from unauthorized access or data breaches by allowing or blocking specific types of traffic based on predefined security rules. By doing so, it enables a customizable approach to security that can adapt to the user's needs, while still maintaining a level of control over what information is allowed to enter or leave the system.

The other options do not accurately represent the role of a software firewall. A software firewall does not create a physical barrier, which is characteristic of hardware firewalls; it operates within the software environment of a device. Additionally, it does not exclusively manage encrypted traffic, as it is concerned with all types of data traffic, regardless of whether it is encrypted. Lastly, while software firewalls can share certain functional similarities with hardware firewalls, they do operate based on specific rules and protocols, which contradicts the notion of acting without any rules.