Launch keys are a critical component aboard Colonial ships. They are used, apparently, to start up a ship's powerplant and engines, similar to the way a car key does for the average automobile. Their removal from a ship will immobilize it.
A briefing aboard Galactica reveals that the grounded ships on New Caprica have had their launch keys removed by the Cylons. The keys are very hard to duplicate and Lee Adama rules out making new ones as too difficult and time consuming (Precipice). One of the resistance's goals is to recover them, which Sharon Agathon manages to do after landing on the planet. The manner in which she does this suggests that they are digital encryption keys and not physical objects (Exodus, Part I).