Onion Routing is a technique for anonymous communication over a computer network. In an onion network, messages are encapsulated in layers of encryption, which can be compared to layers of an onion. Tor is an example of an onion router.
Now suppose you are browsing internet using Tor (the onion router) which is a special browser that lets you use the onion routers. You want to access YouTube but you live in a country where YouTube is banned and you don’t want your government to know that you are visiting YouTube so you decide to use Tor. Your computer needs to contact a particular server to get the homepage of YouTube but it doesn’t directly contact that server. It does that through three servers/routers (these servers are maintained all over the world by volunteers) before that server so that no one can traceback your conversation with that server. (geeksforgeeks.org)
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