Transformers allow for efficient transfer of alternating current from one circuit to another with a change in voltage. They work on the principle of electromagnetic induction between two coils linked by a magnetic core. There are different types including single and three phase transformers based on the number of phases, and core and shell types based on construction. Transformers can step up or step down voltage and are used for applications like power transmission, distribution to homes and industries, and in electronic devices. Practical transformers have losses not present in an ideal transformer.