Question

What is potential drop? Why does it happen?

Answer 1

I assume that you meant electric potential drop.
It is the voltage difference between the two terminals of a circuit element like resistor capacitor etc.
For current to pass through the element that is flow of electrons to occur, threre has to be a potential or voltage drop.
It can be thought as the force provided against the resistance or impedence of the circuit element to push electrons through it.
At the other end the force is reduced due to this resistance.

Potential drop can also mean a change in potential energy which occurs due to change in height.