I want to check how DexGuard works but it seems that it doesn't have a free trial version.
Can DexGuard encrypt an Android application? Or does it simply obfuscate the code? How does DexGuard encryption work? If you could provide code from a sample application run with DexGuard before and after decompilation, it would be great.
ProGuard provides name obfuscation: it can replace the original names of classes, methods, and fields by short, meaningless names. DexGuard additionally provides string encryption and class encryption. The term encryption may be confusing in this context, since these are basically more aggressive types of obfuscation. Designated strings and classes are stored in some intentionally complex encrypted form, and decrypted at runtime with keys and algorithms that are necessarily available to the application. In some ways similarly, the Google Play market can encrypt entire applications for Android 4.1. The runtime environment then decrypts the application before it is executed, in a controlled fashion.
(I am the developer of ProGuard and DexGuard -- feel free to get in touch if you're interested)