Nota bene: I am likely to get many details wrong, caveat emptor.
security - A security is a financial product that pools together contractual debt. Certain kinds of debt are desirable investments; they pay interest rates at varying degrees of interest/risk.
If you are a money manager for some kind of fund, like say a pension plan or a 401k, you may like the risk profile of a certain class of debt, but you can't invest in it directly because you're not in the business of handing out millions of, say, car loans.
So, you talk to an investment bank. An investment bank will buy thousands of loans and, for instance, create a holding company whose sole assets are those loans. You then buy shares in that holding company for $x dollars, and over time – as the debtors pay back their loans - the holding company will issue back dividends until you've made back your investment and the interest.
The securitzation process is seen to diminish the risk of investing in a given kind of loan, and allows people to make