Re: ELI5 please
There are three ways to store your bitcoin:
1) In your own "wallet" where the private key only exists on a USB stick which you keep securely. (If you're sensible, two or three copies of that USB stick in safes or bank vaults in different buildings). You run the "wallet" program on your own computer. This way is a good idea for large amounts of savings, where you're not going to make withdrawals often. You can still make deposits, using just your public key which is part of the public record.
2) In your own "wallet" where the private key is stored (perhaps encrypted with a passphrase) on your personal computer. You run the "wallet" program on your own computer. This is safe unless you get a virus. This way is a good idea for your "current account" equivalent.
3) In an exchange. These are companies with a website that will run a wallet for you; they allow you to transfer funds into your wallet, make payments from your wallet, and convert bitcoin funds to or from dollars or other real-world currencies. They are effectively a bank, but without any regulations or insurance. If you want to convert bitcoin to or from dollars you'll have to set up an account with an exchange. Storing large amount of funds in an exchange for a long period of time is a really bad idea. There are plenty of stories of exchanges running off with people's money, either as a deliberate scam or because they were incompetent and their bitcoins were stolen and they went bankrupt. Your individual account can also be hacked into and your money stolen, if someone can get your username, password and any 2FA authentication that you've set up. That's what seems to have happened in this case.
Dispite the fact that option (3) is the worst and least secure option, it's also the most convenient. So most people store their Bitcoin that way.