It depends on which level of understanding are you asking.
In simple terms, karma is a summary of accumulated actions. It is similar to Newton's Third law of motions in physics, stating that each action creates reaction. For example, you see a ball moving towards you. But what made it move? Probably somebody kicked it, something moved it. You see a car smashing into another car on highway. Well, two drivers must have bee driving, and at least one of them didn't pay attention enough, perhaps was drunk. That's a simple understanding, karma is simply something that is created by each action, yet it doesn't apply only to physical objects.
Lets move a step further though. You get drunk, and you go to a store where you steal a piece of bread because you were hungry. Cop catches you and puts you in jail. On simple level, your karma has acted immediately, you did something wrong (action) and the result (reaction) is that you were placed in jail.
But if you think about it, it is much more complicated. Why were you drunk, why did you steal that piece of bread at first place, why were you hungry and couldn't afford to buy a food like everybody else? The first obvious reason is that you didn't have money. But why didn't you have money and why did you get drunk? Maybe because you were fired for poor performance at work after your wife cheated on you, maybe because you wife divorced you because you were a weak man, maybe because you became alcoholic after your wife divorced you... There could be hundreds of things leading to current situation (you are in jail)...
See, now when you consider the resulting accumulated events (you being in jail) and what lead to it, you can actually understand that you have certain character that lead to it. Your wife would never cheated on you if you gave her great sex and if she respected you as a man. She wouldn't divorce you if she loved you as a masculine man. You wouldn't lose your job if you were strong guy and despite going through difficult life at the moment you kept your life together and performed well...
Now we see that even simple resulting actions (drinking, stealing a piece of bread and ending up in jail) have actually a long string of events that lead to it. It doesn't really matter that you ended up in jail today. If your character is weak, if your decisions and actions are poor, you would eventually ended up in jail anyway for something else. One year from now? Thirty years from now for something else? Or in next life, should such thing exist? Who knows. We can see that karma is not really about you being punished for stealing a piece of bread, but it rather describes your overall character, your previous actions which resulted in some event that is usually perceived as inconvenient to you (e.g. as some form or punishment, but it can also be a reward)...
In other words, if you had different character, if you were behaving differently, you would have different karma, you would be in different situation now...
But there are also even deeper level of understanding of karma. Say you get out of jail, you realized your mistake and you want to correct it. You want to improve your behavior and character, you want to become strong and dominant man with good character. So you stop drinking, start exercising, start working on self improvement... However, you already have a record, many people perceive you as alcoholic and thief. Any quality girl you meet today can look you up on the internet in 5 minutes, she will keep away from you. Many potentially good employers will not hire you because you already have a record. Many friends will avoid you because they are too selfish to understand and care about what is actually going on with you. So you are sort of screwed for the rest of your life. Depending on your situation (and character), you may be left with less quality girls, less quality friends (those you met in jail), and less quality work (in stead of being top paid manager, all you can get now is manual work)...
And all these events and actions in your current life will create another string of actions in the future. Maybe the friend you met in jail will get you into much more serious stuff couple years from now, you become true criminal. Or maybe you dig yourself out of the hole and open your own business, because you are tired by begging for underpaid jobs... It all depends on your current character, on your current actions, decisions, believes, desires... At the same time, your current character and believes are based on previous string of actions and events that happened in the past... See how complicated and deep it can get?
But that is nothing yet. If you study Buddhism, you get to understand Karma way deeper. You can see past your current life, perhaps you can see a string of previous lives that lead to your current one. You may see a string of previous characters that resulted in your current one. You may even predict future life based on your current situation... Is it only a belief, is it a delusion, or is it true? Well, is Newton's Third law of motions just a belief, or is it true? It all depends on your level of understanding, on how far you are willing to get into this stuff...
Further understanding of Karma also gives us understanding how to avoid own Karma, how to reach Nirvana... But that's way deep, it takes many years before one even understands the whole concept. It is a concept of Awareness, of complex mechanism that we call Ego and its resulting perception "I" through which we communicate with external world...
In simple words, each time we associate ourselves with any actions or anything that touches our life we create a new Karma. If we take things that happen to us personally we create new Karma. If we desire to get something in our life (e.g. get a girl, get money, get better life... ) we create a new Karma. New Karma will then simply result in another chain of events in this life, or in our future lives (should such thing exist). The only way to avoid generating new Karma is to practice awareness, practice only observation (sort of dis-attachment of this world), exactly as Buddha teaches...
Hope at least some of it makes sense
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Say you are a weak guy, 150 pounds, and you get beat up by even weaker guy than you. You then decided to go to fitness to gain strength. You start going regularly and you are lifting heavier and heavier weights. After 10 years you will be pretty strong. If somebody looks at your muscles, he will know that you put lots of effort into fitness, that's how you built muscles.
However, there are different levels to it. Say after 10 years you get rejected by girl who doesn't like muscle guys, she likes softer guys. So you decide to remove your muscles. But it doesn't work that way, you can't just remove those muscles. They will be there for some time. Your face will be different, rougher, because your bones reacted to increased levels of testosterone.
So you accumulated some actions in 10 years, and now you will carry consequences. Your body will be strong, your mind will be disciplined, you have developed certain habits and behaviors, you have 250 pounds...