What is meant by hysteresis losses? How is it used in the construction of a transformer?

Hysteresis loss...

When a ferromagnetic material is placed in an alternating current solenoid,the energy is needed to magnetize and demagnetize the material during each cycle of magnetizing current. This energy is needed to do work against internal friction of domains. This work is lost as heat . It is called hysteresis loss.

Iron frame is used as the core of transformer because it has small hysteresis area which represents that small we is lost during it's magnetization and demagnetization. In this way , hysteresis loss useful to decide either the material is suitable for construction of transformer or not.