Step 1: Origin of the current.
Consider a thick block of metal placed in a changing magnetic field. By Faraday's law an emf is induced not just in a wire loop but throughout the volume of the block. Since the block has continuous conducting paths, closed circulating currents appear inside it, these are eddy currents.
Step 2: Direction and the energy question.
By Lenz's law each eddy current opposes the flux change, so mechanical or electrical work must be done against them. This work reappears as heat: power lost \(= I^2R\) within the metal. In transformers and rotating machines this shows up as core heating and reduced efficiency.
Step 3: Controlling the loss.
The heat depends on how large the eddy loops can grow. Slicing the core into thin insulated laminations forces the currents into small loops of high resistance, cutting the loss sharply. Using high-resistivity alloys such as silicon steel helps further.
Step 4: Turning the effect to use.
The same heating and damping action is exploited deliberately in: induction furnaces (melting metal), electromagnetic brakes (smooth non-contact braking of trains), induction motors, dead-beat galvanometers (fast damping of the pointer), speedometers and household induction stoves.
\[\boxed{\text{Whirlpool induced currents} \to I^2R \text{ heat; minimised by lamination, used in furnaces, brakes, motors}}\]