Gairaigo (外来語), or loan words, are words that come from another language, usually English, or other European languages, that have been transliterated in Japanese. Gairago is often confused with wasei-eigo (和製英語), or which are Japanese-made English words.
A lot of post-war modern gairaigo originate from from English. Some of these words are used for concepts that don’t exist in Japanese, while others are used for fashionable reasons. The latter has more often than not a Japanese synonym.
In older times, a lot of gairaigo came from countries that traded with Japan, such as the Netherlands and Portugal. Many pre-war gairaigo are still prevalent today, with one of the best example being medicine. This is because Germany was seen as the most advanced country in the world concerning science and medicine. Words such as ガーゼ (gaaze / gauze), or メス(mesu / scalpel) are still actively used in the Japanese medical lingo.
Gairaigo are generally stand-alone nouns. However, they can be changed into a verb by using the Japanese verb ~suru (する), such as in サッカーをする (sakkaa wo suru / play soccer). Other loan words will be connected with Japanese to create a half-gairago half-Japanese word, such as ユーザー名 (yuuzaa mei / user name). It can go as far as to become a verb all by itself, such as for サボる (saboru / cutting class). This word comes from “sabotage”, and by only attaching a る (ru) to it, it suddenly becomes a verb.
One of the difficulties with gairago and katakana in general is the way to write it properly. This is why some words are reviewed every now and then and slightly changed to make it sound closer to the original English pronunciation. Words such as “party| have changed back and forth from パーティー to パーティ (paatii to paati / party). In most cases, it won’t be seen as incorrect to write either.