Before I answer this question, I should give you some background on Insulin. When we eat sugar or carbohydrates ( i.e. the thing which gets converted into sugar or glucose inside our body), our blood sugar rises. To process this sugar and to make it available to all the muscle and fat cells inside our body, the pancreas releases a hormone called Insulin. The job of the insulin is to take this sugar to the storage sites in the body. If we continue eating high carb diet, the pancreas keeps on producing insulin to regulate the blood sugar and the fat cells keep on storing all this extra energy and hence, insulin stimulates the fat cells to grow which results in Obesity.
The direct effect of obesity is that the person starts overeating as his/her fat cells become extra sensitive to this fat storage process. So, if we look at the cause and effect of obesity, insulin is the root cause and overeating is the effect (and all my life I thought, overeating is the cause of obesity).
To lose weight, we have to tame this hormone called Insulin. If we cut down on the carbs and sugar in our diet and instead increase our fat intake, the blood sugar gets stabilized which in turn stabilizes the insulin. In the absence of glucose, the fat cells start releasing the stored energy (i.e. fat) in the form of ketones. In other words, the body switches from being sugar-burning mode to fat-burning mode.
Resources:
Why we get fat – Gary Taubes
Keto-Sheto 