There's a narrow little stream flowing along just fine, running its natural course, headed toward the bigger river down in the valley. Then some beavers knock down a tree right across the stream. It changes course. Now, it's running right towards Farmer Johnson's barn, where it will flood the hay and give the horses hoof-rot. After which Farmer Johnson will start looking for his beaver-skinning knife.
That situation (up to the beaver-skinning part) describes the operation of a market distortion. The market is running fine. Then some outside influence (usually a new regulation or government subsidy) gets involved, causing the market to change its operation, often in unexpected ways.
The government passes a new subsidy on alternative wheatgrass fuel. The goal is to create a new source of green energy. Any company that produces a minimum amount of fuel oil refined from wheatgrass gets a check from the National Wheatgrass Board.
So companies stop some of their other activities and turn toward wheatgrass. Progress on solar and wind technology gets delayed as green energy companies switch directions. Other companies (Amazon, Hilton Hotels, Disney) set up wheatgrass fuel subsidies. Regular gas prices go up, because companies are making more wheatgrass fuel and less gasoline (nobody in Washington bothered to look into whether anybody had wheatgrass-burning cars before they passed the legislation).
The subsidy causes unexpected ripples across the market. Market distortion.