Carbohydrates(mainly glucose) are your initial source of energy in the body. Carbohydrates come in different forms as the above posters mentioned, but are broken down to their simplest constituents to be used for ENERGY. Whenever you begin exercise of any sort, or have had a large meal full of starchy and high-sugar foods(breads, rice, fruits, soda, potatoes, bagels, pasta, most types of desserts, chocolate, etc --> just look on the nutrition facts to see if it has carbs or not), your body first looks to using it up BEFORE it turns to your fat stores. If you do not use up all the carbohydrates floating in your body, they are converted into fat and stored in your body. If you DO use up all the carbohydrates, your body says "hey, I'm out of energy...let's bring out the reserves!"
That's when the fat starts to melt off...and that's the basis of the Atkins low-carb diet. Your body has no carbs to look to, so what does it burn? Fat. Unfortunately, Atkins can have some bad side effects if you don't weight train...because when your body is in "carbohydrate starvation" mode and your muscles are not actively being used --> it breaks them down for energy as well. So, many people will lose tons of weight on Atkins, but it turns out to be both fat AND muscle(not good) if you neglect weight training and high-protein foods.
My own theory on dieting is that I tend to eat everything in a balance, but if I need to cut SOMETHING out of my meal(because it's too big) --> I always cut out the carb. I never eat potatoes, ever hahaha...just because they're sooo starchy.
Finally, this is why walking is the best exercise to lose fat. You are working at low intensity, and so your body starts out using a small bit of glucose and in a short time, switches to using your fat stores. Because you are not in "carbohydrate starvation" mode, or "strenuous physical activity" mode --> the fat just keeps melting off. For losing weight, I'd recommend 60 minutes of walking a day, broken up into three sets of 20. That way you are walking throughout the day, helping to keep your metabolism up and not doing everything in one burst!
I love walking as opposed to a lot of the other training I do for my martial arts and gymnastics because even if those leave me sore to the point where I can barely move...I can always walk and keep losing fat. It's so low intensity that you don't get sore from it, and can recover from soreness while you do it. Walking rocks as the best supplementary exercise EVA!