The hippocampus is a part of the limbic system and is located in the temporal lobes of the brain. We have two temporal lobes. One on the right side of the brain and one on the left side of the brain. If you were to put two fingers above your ears, that's roughly about where the temporal lobes are located.
The hippocampus is most known for its role in learning and memory, but it also plays a role in spatial navigation, emotional behavior, and regulation of hypothalamic functions (body temp, heart rate, mood, hunger, sleep, sex drive etc.).
Now, when it comes to learning and memory, the hippocampus plays a strong role in the generation, storage, and retrieval of episodic memory (a type of explicit, long-term memory) and it organizes information in the context in which it was experienced. Therefore, when there is damage to the hippocampus people will have a harder time forming new memories and learning new information. And, because the hippocampus also plays a role in spatial navigation, you will see additional challenges in getting around and in the ability to relate landmarks with one another, especially in unfamiliar environments.
Now, hippocampal damage is most significant in Alzheimer's disease — it's one of the big hallmarks because it is one of the earliest brain regions impacted. However, we still see atrophy or volume loss in other dementias such as Lewy Body dementia, vascular dementia, and frontotemporal dementia.
They believe neuritic plaques, neurofibrillary tangles, and vascular damage are some of the mechanisms that causes this atrophy of the hippocampus.
And, hippocampal atrophy appears to correlate with decline in cognitive status. There appears to be this breakdown in connectivity between the hippocampus and the rest of the brain that progressively gets worse.
Luckily, implicit memory is relatively spared in hippocampal damage.
References:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3548359/
https://jamanetwork.com/journals/jamaneurology/fullarticle/794642
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4045526/
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