When most people think about a theory, or call something ‘theoretical’, what they are really thinking about is ‘hypothetical’.
Theories are just explanations of how and why something works (or doesn’t). They are made up of concepts and principles and are tested scientifically.
Theories really serve two functions - they help us to understand or explain what is going on around us and they help us predict future events.
Think about dropping a pen - it falls to the ground, but it doesn’t fall because you dropped it. It falls because of gravity. Gravity is explained by Einstein’s Theory of General Relativity.