Penal substitution means that when we do something wrong, someone else pays the punishment for us. It's like when you break a vase in your house and your mom makes you pay for it, but your big brother offers to pay the punishment for you.
In religion, penal substitution means that God is very upset with us because we keep doing bad things, and someone has to pay the punishment for our mistakes. This is where Jesus comes in. He offers to take our punishment and pay the price for us.
So, imagine you were driving too fast and got a ticket. You don't have enough money to pay it, and your friend says they will pay the ticket for you. This is like penal substitution. Jesus paid the price for us, so we don't have to be punished anymore.