AC systems

The proper operation of an AC system requires magnetization/energization of the apparatus, machines, transformers, lines, etc.

If you do not properly energize the equipment, no active power conversion, MW conversion, (mechanical power being converted to electrical power in generators, electrical power being converted to mechanical power in motors, etc.) can happen. Similarly, you cannot transfer active power from one winding of a transformer to another winding, without first building up the magnetic flux at the core of said transformer.

In other words: no reactive power? Then you will also not have any active power in an AC system!

Some equipment (mostly synchronous machines) have their own excitation systems, so they have control over its own magnetization and, more important, can build up such magnetization without the help of a "system".

Induction motors, on the other hand, require the "system" to supply its magnetization. Therefore, every induction motor/generator requires an external source for magnetization and, as a result, will operate with a power factor different than 1. Always "sucking" reactive power from the "system". Similar argument can be made for transformers and even transmission lines (just look up "inrush currents" for instance). Transmission lines are a bit more complicated than that, they have inductances and capacitances and that is FUN!

We call "reactive power" the power that flows back and forth, with an average of zero (therefore, no energy associated with) as a result of charging and discharging electrical and magnetic fields in all these devices. This charge and discharge happen every cycle of the AC system, it is in the nature of the AC fields.

Thus, reactive power is NOT "losses". It is just necessary, it is the "grease" that allows the operation of an AC system. Losses are related to current magnitudes on resistors. There are no losses for these same currents flowing through capacitors or inductors.

Losses are strictly R.I^2

Therefore, any current will cause losses. Therefore, even at perfect unity power factor you will have losses! Because you will have a current, corresponding to the active power. Yes, very poor power factor will result in an increase in the current magnitude, increasing losses. But reactive power is NOT losses.

Finally, even if you don't know what reactive power is, you know exactly how to "measure" it: if you do not have enough reactive power available (to sustain the necessary magnetization of the AC apparatus) voltages will drop. If you have too much reactive power around, voltages will rise. In other words, as long as we are capable of controlling voltages (mostly via control of excitation systems in synchronous generators), we will have reactive power flows "just right".