From http://www.coderanch.com/t/236675/java-programmer-SCJP/certification/xff
The hex literal 0xFF is an equal int(255). Java represents int as 32 bits. It look like this in binary:
00000000 00000000 00000000 11111111
When you do a bit wise AND with this value(255) on any number, it is going to mask(make ZEROs) all but the lowest 8 bits of the number (will be as-is).
... 01100100 00000101 & ...00000000 11111111 = 00000000 00000101
& is something like % but not really.
And why 0xff? this in ((power of 2) - 1).
All ((power of 2) - 1) (e.g 7, 255...) will behave something like % operator.
Then
In binary, 0 is, all zeros, and 255 looks like this:
00000000 00000000 00000000 11111111
And -1 looks like this
11111111 11111111 11111111 11111111
When you do a bitwise AND of 0xFF and any value from 0 to 255, the result is the exact same as the value. And if any value higher than 255 still the result will be within 0-255.
However, if you do:
-1 & 0xFF
you get
00000000 00000000 00000000 11111111, which does NOT equal the original value of -1 (11111111 is 255 in decimal).
Few more bit manipulation: (Not related to the question)
X >> 1 = X/2
X << 1 = 2X
Check any particular bit is set(1) or not (0) then
 int thirdBitTobeChecked =   1 << 2   (...0000100)
 int onWhichThisHasTobeTested = 5     (.......101)
 int isBitSet = onWhichThisHasTobeTested  & thirdBitTobeChecked;
 if(isBitSet > 0) {
  //Third Bit is set to 1 
 } 
Set(1) a particular bit
 int thirdBitTobeSet =   1 << 2    (...0000100)
 int onWhichThisHasTobeSet = 2     (.......010)
 onWhichThisHasTobeSet |= thirdBitTobeSet;
ReSet(0) a particular bit
int thirdBitTobeReSet =   ~(1 << 2)  ; //(...1111011)
int onWhichThisHasTobeReSet = 6      ;//(.....000110)
onWhichThisHasTobeReSet &= thirdBitTobeReSet;
XOR 
Just note that if you perform XOR operation twice, will results the same value.
byte toBeEncrypted = 0010 0110
byte salt          = 0100 1011
byte encryptedVal  =  toBeEncrypted ^ salt == 0110 1101
byte decryptedVal  =  encryptedVal  ^ salt == 0010 0110 == toBeEncrypted :)
One more logic with XOR is
if     A (XOR) B == C (salt)
then   C (XOR) B == A
       C (XOR) A == B
The above is useful to swap two variables without temp like below
a = a ^ b; b = a ^ b; a = a ^ b;
OR
a ^= b ^= a ^= b;