The basic deal of a money market fund is that you give it your money, it invests it in stuff, it pays you a little bit of interest, and whenever you want you can take your money back out. (This is the basic deal of a bank account, too.) The basic problem is that, if your money market fund has $1,000 of your money, and $99,000 of other people's money, and invests it in $100,000 worth of stuff, every so often that stuff ends up being worth, like, $98,000. And then the fund has a problem when you go to it and ask for your $1,000 back.
It's a weird empirical fact that this problem rarely occurs, and almost always gets solved somehow when it does.
But every once in a long while it doesn't, and people lose money. And they're not supposed to lose money, because a money market fund is where you put the money you don't want to lose. (There are plenty of other places to put the money you want to lose, and they all pay more interest than money market funds.)
