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Basically, your firewall will stop your Mac from responding when it gets queries from other machines. It still allows outgoing information from your Mac, so it’s kind of like someone who talks as much as they please, but will not listen to anything anyone else says, which in the case of a computer can be a good thing. Or, as Apple puts it:
“...you can use “stealth mode” to make it more difficult for attackers to find your computer. Stealth mode is available if you have the firewall turned on. When stealth mode is turned on, your computer does not respond to “ping” requests and does not answer connection attempts from a closed TCP or UDP.” http://support.apple.com/kb/PH11198