A "pawn" of advantage is the basic unit engines use to measure how good a position is. A centipawn is one hundredth of a pawn, the same relationship a cent has to a dollar. Engines use the smaller unit so they can talk about tiny advantages precisely instead of rounding everything to the nearest whole pawn.
Centipawn loss is simply the gap between the best move available and the move you actually played, measured in that unit. If the engine's top choice kept the evaluation at +50 (half a pawn better for you) and your move dropped it to -30, you lost 80 centipawns on that move. Zero centipawn loss means you found the engine's top choice. Large centipawn loss means you played something that measurably worsened your position.
An extreme, easy-to-see example: White to play, and Rxe2 simply wins the rook for free. Playing anything else here would register as a huge centipawn loss, an evaluation swing measured in whole pawns, not fractions of one.
Why it is the standard measurement
Centipawn loss is popular because it is objective and it works the same way for every position, whether you are up a rook or down a pawn in a dead-drawn endgame. It does not care about your rating or your intentions. It just measures the size of the gap between what you played and what was actually best.
What it does not tell you
A single centipawn-loss number has real blind spots. A 40-centipawn "mistake" that walks into a completely lost position is a different animal from a 40-centipawn "mistake" that gives back a tiny fraction of a large winning advantage you still keep easily. That is why grading systems, Rookie's included, bucket moves into categories like Nice, Meh, Whoops, and Facepalm rather than reporting raw centipawn numbers on their own, and why good tools cross-check against how strong human players have actually handled the same position, so a sharp but sound sacrifice does not get incorrectly flagged as an error just because it is not the engine's single top line.
Rookie grades every move in your games this way, free, and turns your actual mistakes into puzzles instead of just showing you a number. Paste your Chess.com username to see it on your own games.