In a very small nutshell: to get continuous power but still use AC it helps if you offset the AC on several conductors. The lowest number of conductors with which this works well is three, and 360 degrees rotation offset in three equal bits is 120 degrees, hence three phase power, where each 'phase' is offset by 120 degrees from the other two. The current and voltage between the conductors are said to be 'out of phase' by 120 degrees.