How dungeon loot works???

Hello!!! So i'm kind of new to the game (as you could imagine lol) and i've just gone through my first dungeon, but while i was to focused on healing and reviving my party members i did not understood anything of how loot works, or at least how you aquire loot. I did notice the open chests as i were running around with the party, so i looked into one of them and still with the little time i had to look at it did not understand, also i saw party members rolling on items, what is all this?!?!?!? Help!!! Explain to me as if i am a 5 yr old lol