Entropy refers to the amount of energy in a system that is unavailable to do work. An example of unavailable energy is the thermal energy in water at room temperature, which cannot be used to heat a mug of coffee at a higher temperature without an external energy source. The concept of exergy helps clarify the distinction between available and unavailable energy fractions. Understanding these principles is crucial for grasping how energy efficiency works in practical applications. Overall, the discussion emphasizes the importance of recognizing the limitations of energy in performing work.