When you want to use the internet, you need to connect to it through a service provider that can get you online. This provider uses wires and cables to send signals to your house or apartment, which is called the "local loop".
Local loop unbundling means that different service providers are allowed to use these wires and cables to connect you to the internet. This way, you can choose which provider you want to use, even if they don't own the wires and cables themselves.
It's like sharing your toys with your friends. If you have a lot of toys, you can let your friends borrow some so they can play with you. Local loop unbundling lets more providers share the same wires and cables to offer different internet services to you.