Efficiency is defined as the ratio of useful output energy to input energy, and factors like friction and air resistance significantly reduce this ratio. In mechanical systems, energy is often lost as heat due to friction, which requires more applied force and decreases overall efficiency. Additionally, when moving objects on different surfaces, such as carpet versus ice, the energy lost to overcoming resistance illustrates why efficiency cannot reach 100%. The discussion emphasizes the importance of understanding energy loss in various forms, including heat generated from friction. Ultimately, recognizing these factors is crucial for analyzing the efficiency of mechanical systems.