Real transformers always have some energy losses. For example, both the primary and secondary coils must have some resistance, resulting in I2R heating in the coils. It also takes energy to switch the direction of the magnetic domains in the iron at 50Hz or 60 Hz, resulting in something called the hysteresis loss. Most interestingly, there is this thing called the eddy current loss.
Remember that an iron core is chosen for its superior magnetic permeability to help us achieve a large (changing) magnetic flux f. But iron is also a good electrical conductor. So the changing magnetic flux will induce the so-called eddy current in the core. Eddy currents are very undesirable since they waste energy through I2R heating.
Fortunately we have a solution for this: laminations. Instead of one solid iron block, we assemble the core from thin iron sheets. These sheets are insulated from one another electrically by either the natural coating of oxide or insulating varnish. While the permeability to the flow of magnetic flux in the core is preserved, the flow of electric current (in the perpendicular plane) is dramatically restricted.
Because the eddy currents are now constrained to flow within each thin sheet, the resistance presented to the eddy current is greatly increased by the narrowing of the cross sectional area of the conducting path. (Think ). That’s how we suppress the magnitude of the eddy current in the core!