Almost everything you eat contains nutrients that your body can convert into energy. It uses this energy to power your organs, muscles, brains, pretty much everything you need to survive.

Because there are a lot of different nutrients, and a lot of different ways for your body to store or convert this energy, we use a standardized unit of measurement called a calorie. This unit can be used to define how much 'energy' a certain kind of food has, and how much 'energy' your body needs to perform a specific function. When the amount of energy you eat is less than the amount of energy your body uses, you are said to be in a 'calorie deficit'. Usually this measured over the period of a day, i.e. how much did you eat today vs. how much energy did you expend.

But what does this mean for your body? If you are consuming less calories than your body is using to keep you alive, where does the remaining energy come from? well, whenever you are in a calorie surplus (which is, as you might expect, the exact opposite of a deficit - we are consuming more energy than we are expending), your body stores the remaining, unused, energy as fat, to be used at a later time. Then, whenever we are in a deficit, these stored fat cells are converted back into usable energy.

From this, you can also see why eating more than our body needs causes us to gain weight: the surplus calories are stored as fat cells. And when we start consuming less food so that we are in a calorie deficit, we lose weight because the stored fat cells are used to generate the needed energy.