For something such as a sound wave, Y represents the pressure at point x, at time t. It's a bit more challenging to visualize, but the formula is applied the same way.
The amount of energy in the system will not change. The energy starts as potential (prior to release) and gets converted to kinetic (as the particles accelerate away from one another). It is not a matter of "losing" energy, but a change from potential to kinetic energy.