What is the 10% rule? What is its significance? Why is energy lost?

The 10% rule means that approximately there will be only 10% energy transferred from a trophic level into another. That was because the consumer on the upper level will use the energy before it was consumed. About 90% of the energy used so only 10% remain will be transferred.

Example: an antler eating grass with a total 100 calories. Then the antler is moving and growing, using 90 calories. Then a lion eats the antler, but the energy remains is only 10 calorie because 90 calories are already used.