Economies of scale means the bigger you get, the cheaper each unit becomes. When a company increases production, it spreads its fixed costs (rent, equipment, management salaries) over more units — driving down the average cost per unit.
Example: A factory making 1,000 t-shirts pays $5 per shirt (including $2 in fixed costs spread across 1,000 units). Make 10,000 shirts, and fixed costs per shirt drop to $0.20 — total cost per shirt falls to $3.20. That is economies of scale in action.
This is why Amazon, Walmart, and Samsung dominate their markets. Their massive scale lets them produce and deliver at costs smaller competitors simply cannot match. However, there is a limit — "diseconomies of scale" kick in when companies become so large that bureaucracy, coordination problems, and inefficiency push costs back up.