On how it works:

It’s effectively an IP/domain/protocol blacklist. So if you break the rules for example by refusing to host Chinese user data on servers in China as is required by law you get out on the list and your site is blocked. Other things blocked are domains commonly used for spam e.g. .ml is blocked by the firewall as it was a free domain commonly used for spam. So I'm using a VPN as all .ml sites are blocked (as far as I'm aware, there might be some who petitioned their way off but I don't know)

On why it was put in place:

The firewall was created to foster and protect China’s fledgling digital infrastructure and data sovereignty. Many countries regulate foreign platforms and data flows. China built its own ecosystem instead of depending on foreign companies. We have seen what happens when foreign platforms operate without local oversight: Facebook facilitating genocide in Myanmar, coordinated anti-vax disinformation campaigns in Southeast Asia, algorithm-driven radicalization, etc. The firewall makes those kinds of external influence operations harder or close to impossible to run at scale.