What happens to excess fats inside the body?

Fat. Excessive calories that are eaten are stored in the body as fat in fat cells. When there is a time period for need for this calories, the body draws from this store of energy.
Many things. We all need body fat. It serves many good functions. But excess body implies more that you need for normal body functions, and can have many negative health effects. The excess fat can be stored in your fat cells or can be released form fat cells and burned for energy, if you are exercising and eating healthy foods in healthy portions. The fat cells themselves don't, however, disappear.