Tor is about hiding your location, not about encrypting your communication.
Instead of taking a direct route from source to destination, communications using the Tor network take a random pathway through several Tor relays that cover your tracks. So no observer at any single point can tell where the data came from or where it's going.
The last relay on this circuit, called the exit node, is the one that establishes the actual connection to the destination server. As Tor does not, and by design cannot, encrypt the traffic between an exit node and the destination server, any exit node is in a position to capture any traffic passing through it.