Chrism is olive oil mixed with balsam and consecrated by a bishop, and its distinctive feature is that it marks the moments at which the church seals a person or a thing as belonging wholly to God.
What chrism seals
Chrism is used in baptism, in confirmation, in the ordination of priests and bishops, and in the consecration of churches and altars, and in the Eastern churches it carries the gift of the Spirit in the rite corresponding to confirmation, given immediately after baptism. In each case the anointing signifies a permanent setting-apart, which is why the same oil consecrates a new Christian, a new priest and a new altar: all are sealed as God own. The fragrance of the balsam mixed into the oil is itself part of the sign, a sweetness that clings to what is anointed.
Reserved to the bishop
Unlike the other holy oils, chrism can be consecrated only by a bishop, and in the Western church it is blessed once a year at the Chrism Mass of Holy Week, from which it is distributed to the parishes of the diocese for the year to come. That reservation ties every anointing with chrism back to the bishop and so to the unity of the local church around him, so the oil, beyond its use on any one person, is a thread binding the sacraments of a diocese to the office at its head. It is kept in a locked place with the other holy oils.