Lipids are a diverse group of compounds that contain carbon, hydrogen, and oxygen. They include fats, oils, waxes, phospholipids, and steroids. Lipids are insoluble in water due to their hydrophobic fatty acid chains but soluble in organic solvents. They form emulsions when dissolved in ethanol and added to water. Lipids serve important functions as energy stores, providing insulation and buoyancy, and forming cell membranes through phospholipids.