What does it mean (to decode) in the execution cycle

In a typical instruction cycle, fetching, decoding, executing together form one cycle. My question is about the decoding step: What is the part that gets decoded, is it the instruction's opcode? If so, why it is encoded then?

In fact, I understand decoding here in similar way as what you decode a message given a key in the field of security, which is what is confuses me a bit.

Thank you.