One of the fundamental laws of nature is that energy cannot be made or destroyed, just transformed from one form into another.
If you think about it, you require energy to run about. That energy comes from your food which by one means or another has got its energy from the sun (plants by photosynthesis, animals by eating plants).
However, when you convert from one form of energy into another not all of the energy you begin with is transformed into the useful energy. Some energy will be transformed into unwanted types of energy, ie it is wasted. These unwanted types of energy reduce the amount of useful energy which is transformed during a process.
For example, a car engine converts chemical energy into kinetic energy to allow it to move – but there are several other forms of energy involved in the process, with some energy being wasted (or ‘lost’) because it is transformed to heat and sound by the engine. The amount of useful energy (in a car, this is mainly kinetic energy) is less than the amount of energy contained in the fuel. The efficiency of the process is less than 100% because of these ‘energy losses’.