Oil is a substance that is liquid at room temperature. Oil does not mix with water. Oil can be heated to much higher temperatures than water can, and so is useful in cooking food. Because oil does not stick to things, it is used to help stop food sticking when it is being cooked, and it helps stop parts of machinery like car engines from sticking together when they are running. Most oils will burn under the right conditions and can be used as a heat or light source, and a fuel to run things like internal combustion engines.
Oil can be made from the seeds of many plants, as well as dug up from under the ground. Oil that comes from the ground used to be plants or animals many thousands of years ago, and had been changed into oil by the movement of the Earth.