In a market, the price of something settles where the quantity people want to buy equals the quantity sellers want to provide. If a product is scarce and many want it, buyers bid the price up; if it's abundant or few want it, sellers cut prices to move it. This constant tug is supply and demand, and the price it produces is a signal that coordinates strangers who never meet.
That signal does real work. A high price tells producers 'make more of this' and tells consumers 'use less of this'; a low price does the reverse. This is what Adam Smith meant by the 'invisible hand' — no central planner decides how many umbrellas a city needs, yet prices nudge production and consumption toward rough balance. Interfering with the signal has consequences: price caps below the market rate reliably cause shortages, because they tell producers to make less exactly when demand is high.