Why does rust happen?

Iron reacts with oxygen in the air to from Iron Oxide, commonly Iron (IV) Oxide. Iron oxide is a weaker, more brittle material, and is reddish brown. So when you see rust, it is not longer the iron, but an entirely new material.

It is like Dough to a burnt crust. It used to be the stronger dough, but has changed into something completely different which is easy to crumple.