You cannot see the private file. Now you can send the file to your friend X. When X receives the file, He/She can open the file if and only if he know the password. He /She can extract the file without any damage. Suppose a person if receives the file or its copy in the middle he cannot access it. He only accesses the host file. He just have the host file not the file that is inside the host.
Basically, Steganography means of transmitting the message by hiding in any file like pictures, music, movies, or any file without changing the original file format. It happens somewhat like this.
You hide the message or the private file that you wanna send to your friend X. But it is very private, you are afraid that someone can have during the sending the file. What would you do now? It seems to be a great problem. Here is the solution you hide the file in any of the another file. Insert the file in the file. Now enter the password to encrypt the private file in the host file. The file is encrypted now. If you do open the encrypted file then the result you see is only the host file.
This method of transferring the file by hiding inside the host file without changing the file type of the host file is called steganography. This method is found to be very fruitful.