### Summary

Loss is a way to measure how well an AI model’s predictions match the true values. The less the loss, the better the model, while a larger loss indicates bad predictions, leading us to adjust the model.

### ELI5

Imagine you’re practicing archery. Every time you shoot an arrow, you might miss the bullseye. The further your arrow lands from the bullseye, the more points you lose. In AI, when making predictions, our model is the archer and the loss is our score reduction. We want the score reduction, or the loss, to be as small as possible.

### In-depth explanation

In the field of machine learning and artificial intelligence, ’loss’ refers to a scalar quantity meant to represent the discrepancy or gap between the actual output (the truth) and the predicted output (the prediction). This discrepancy measure plays a key role in the learning process of AI models which strive to minimize this loss via various optimization strategies.

Loss functions, which compute and return the loss, can take a variety of forms depending on the learning tasks. For regression tasks, common loss functions are Mean Squared Error (MSE) or Mean Absolute Error (MAE). On the contrary, for classification tasks, Cross-Entropy Loss or Log Loss are frequently utilized.

An important element to understand about loss is its role in the process of training a model. Initial predictions from a model are typically far from perfect, hence the loss value is quite high. The goal then is to improve the model, typically by tweaking parameters, in a way that minimizes this loss value.

The way we achieve this is done through the algorithmic process known as gradient descent, which aims to find the minimum of the loss function. Essentially, gradient descent iteratively adjusts the model’s parameters in the opposite direction of the gradient of the loss function at the current parameter values to move towards areas of lower loss.

Understanding the concept of ‘overfitting’ and ‘underfitting’ is also vital here. When the model performs well on training data but poorly on unseen data, the model might be ‘overfitting’ the training data. Whereas, ‘underfitting’ means the model performs poorly on the training data and thus, expectedly, on unseen data too. Balancing this trade-off is frequently a key step in model tuning.

In conclusion, loss can be viewed as a guiding light for the machine learning model, illuminating the path towards predictively accurate configuration of parameters. The functionalities of loss are pivotal not only in training the model, but also serve as means of comparing different models, and in tuning models to improve their ability to effectively generalize beyond the training data.

### Related terms

Gradient Descent, Loss Function, Overfitting, Underfitting, Regularization, MSE, MAE, Log Loss, Cross-Entropy Loss, Backpropagation, Epoch, Batch, Stochastic Gradient Descent.