Energy transfer in food chains occurs through a sequence of trophic levels, starting with primary producers like plants, followed by primary consumers (herbivores), secondary consumers (carnivores), and so on. Each level consumes the one below it, transferring energy to the next through feeding relationships. Energy is lost at each trophic level, primarily as heat during metabolic processes, leading to decreasing energy availability as you move up the chain. This concept is illustrated by the 10% rule, which suggests that only about 10% of energy from one level is passed to the next.