Humans are social creatures. This is why being cut off from our peers (for whatever reason) is so painful. It's not natural, nor is it beneficial. Total isolation can make a person go mad. However, loneliness in lesser bursts can be destructive as well, only it takes longer for the effects to settle in.
Most lonely people are lonely in crowds. They go to work and school and so many crowded places where they encounter a variety of people. Yet they, for whatever reason, are not able to make connections with those people or get those to understand them or care about them. They are, for all intents and purposes, alone. They may be isolating themselves, others may be isolating them or some other factor might be isolating them. No matter what the cause, the effect is still the same.
If they continue long enough in that state, they will become depressed and/or anxious. If they remain even long enough in that state, their ability to form relationships and interact with others will be forever damaged, especially if this began when they were young. There will always be something "off" about them. Loneliness can even cause health problems and a shorter life (cut short either by these health problems or suicide).
Loneliness will make you edgy; it will make you not trust people; it will make you feel like something is wrong with you, deeply wrong. You will feel like it is your fault, but that you are powerless to change it. Eventually, it will become a perpetual state of mind. You will feel alone even when you are not.
I know this firsthand. I have spent the majority of my life alone, or at least feeling alone (it doesn't matter if you are actually alone or not, because if you feel alone, you are). I am not sure whether bullying isolated me or if I isolated myself. Maybe it was my weirdness that turned my peers off, some odd way that I was acting socially. Maybe they sensed a weakness and this only caused those predatory in nature to find me. It doesn't matter what it was. I think this sort of isolation is what has led to a lot of my problems (rather than the bullying like many might think), is leading those problems now. It was not the fact that something happened to me, but that something didn't happen: those vital social interactions so integral to growing up. I'm not trying to be self-pitying, rather introspective. There are millions of children around the world who are going through the same thing that I did. Plenty of adults too.
It's a complicated problem, very complex. I suppose that everyone grows through it at some point in their lives, to varying degrees. How in the world could everyone feel it and we not have a solution for it? Yet of course it's not so simple. So we suffer in silence, lonely.