Concept of eddy current

Eddy Currents are electric currents produced in a metal due to changing magnetic flux (happens only in AC or ripple DC or in situations where the voltage or current is changing with respect to time).

One example is in a transformer where Eddy Currents are induced in the Iron core, the difference between the iron core and secondary winding is that the iron has the ability to channel flux with the least amount of resistance, which means that iron has a high permeability to magnetic flux (free space has resistance towards magnetic flux passing through it, the Resistance is called as Reluctance, but this reluctance doesn't dissipate power like resistance it only stores the energy). Both the windings and iron core is conductive so the Iron core is like a shorted winding. What happens when you short a wire which has potentially developed in it? The current starts to flow in it causing the wire to heat up and dissipate heat. This is what exactly happens in an Iron core or similar conductive material. This current is called Eddy Current. You can also call the current induced in the winding when connected to a load Eddy Currents. But we are using the current induced in the winding for some work to be done, that is why we call it just current and not Eddy Current loss. The current induced on the other hand in the core is being just wasted, we don't want that to happen but since it's happening we call it a loss.

Eddy Current

Modern equipment that uses alternating voltages always uses Silicon Steel, the Silicon in the steel significantly increases the electrical resistivity of the steel, which decreases the induced eddy currents and narrows the hysteresis loop of the material, thus lowering the core loss. But it has excellent magnetic permeability.

It's just an attempt to remove the unwanted feature of Iron (i. e., conductivity). The eddy current loss is a complex function of the square of supply frequency and the inverse square of the material thickness. Eddy current losses can be further reduced by making the core of a stack of plates electrically insulated from each other, rather than a solid block; all transformers operating at low frequencies use laminated or similar cores. Higher the rate of change of magnetic flux (due to higher operating frequency), the higher the magnitude of Eddy Currents induced. So equipment that operates at higher frequency uses extremely thin laminations.

Hope this helps :)