Exercise increases your metabolism for a time and also knocks a chunk out of your daily calorie intake. For example:
2000 calories of food - 500 calories burned cycling = 1500 net calories for the day.
If your body expends 2,000 calories during your normal routine of living, then you've burned 500 more calories than you took in.
1,500 calories consumed - 2,000 calories used = (500) calories
Do that for seven days (7 x 500) and you've lost 3,500 calories, or one pound of fat. Basically.
Lifting weights also increases your metabolism for a time. It also, over time, increases your metabolism permanently because muscle cells need more calories than fat cells. So if you add 10 pounds of muscle, you body might start burning 2,300 calories a day instead of 2,000 just by virtue of you being bulked up. Put 2,300 calories into our equation and you get:
1,500 calories consumed - 2,300 calories used = (800) calories
Do that for seven days (7 x 800) and you've lost 5,600 calories, or 1.6 pounds of fat. Basically.
The difference over the course of a year is huge.
Losing one pound per week is 52 pounds of weight loss in a year.
Losing 1.6 pounds of fat per week is 83 pounds of weight loss in a year.