Inputs, outputs, and the UTXO model
It's tempting to picture a Bitcoin transaction like a bank transfer, an amount moving out of your account balance and into someone else's. Bitcoin doesn't actually have account balances stored anywhere. Instead, it tracks individual chunks of bitcoin called Unspent Transaction Outputs, or UTXOs. Think of them like physical bills of odd denominations sitting in your wallet, each one was created by a previous transaction and is either fully spent or not touched at all, there's no partial spending of a single UTXO.
When you send bitcoin, your wallet selects one or more of your existing UTXOs as inputs, then creates new outputs, one going to the recipient, and often another sending the leftover 'change' back to you as a brand new UTXO. If you have a single UTXO worth 1.2 BTC and want to pay someone 0.5 BTC, the transaction consumes that whole 1.2 BTC input and produces two new outputs: 0.5 BTC to the recipient and roughly 0.68 BTC back to you as change, with the small remainder going to miners as a fee.