A transformer is made of two coils of insulated wire wound on the same iron core. The coil connected to the input supply is the primary coil and the coil connected to the output is the secondary coil. The two coils are not connected to each other by wire.
An alternating current in the primary coil produces a changing magnetic field, because the current keeps changing size and direction. The iron core carries this changing magnetic field through the secondary coil. A changing magnetic field around a conductor induces a potential difference across its ends, so an alternating potential difference is induced in the secondary coil. If the secondary coil is part of a complete circuit, a current flows in it.
A direct current gives a steady magnetic field. A steady field does not change, so no potential difference is induced in the secondary coil. This is why transformers only work with alternating current.
