4-20mA current loops are a means of transferring data from a remote sensor to a central controller device.
The concept behind the 4-20mA current loop is the TRANSMITTER draws current from the POWER SOURCE in direct proportion to the variable property the sensor is measuring.
The same current flows around the loop to the CENTRAL CONTROLLER. The controller can then sense the current and intrepret the result, perhaps displaying the sensor's value on a screen.
So for example a 4-20mA transmitter rated for a 0 to 100deg temperature sensor would generate 4mA at 0 degrees, 20mA at 100deg, and 12mA at 50deg and so on.
4-20mA current loops are widely used in industry as an analog communication interface. Please see diagram in file attached for better understanding.
The MAX12900 is a popular 4-20mA Sensor Transmitter.