The reason they're called fossil fuels is actually a bit strange. Fossils are mineralized remains of ancient plants and animals. They're our primary way of studying life forms that lived millions of years ago. But actual fossils have nothing to do with any of the fuels. The term 'fossil' has come to be used as slang for anything particularly ancient, even though that's not the original meaning of the word. As a result, these fuel sources that come from ancient plants and animals are referred to with that word, even though no actual fossils are involved.
The reason fossil fuels, as a class, are so important is because they're non-renewable. Once a fossil fuel is burned, it won't be replaced for millions of years (or possibly ever, as the processes that created them may no longer work the same way). That means that when we run out of a fossil fuel, it's gone forever. If we have nothing to replace it, then we're in trouble. The other impact is that there's a huge amount of carbon locked up in the fossil fuels. All of this carbon has been sitting in the earth for an unimaginably long time. As we burn it, we're releasing this carbon into the atmosphere, in the form of carbon dioxide, which causes serious environmental problems.
