The Tory government lost in large part because of public anger about inflation/cost of living increases. This problem has dogged incumbents throughout the Western world (Biden, Trudeau, Macron). In this case, it was a right-wing government that got blamed instead of a left-wing one (as in the US and Canada). Voters hate inflation and price increases, and tend to blame the incumbent, regardless of ideology, and without thinking carefully about whether they really caused the problem or not.
The victorious Labor Party got almost 2/3 of the seats in the House of Commons, despite winning only 34% of the vote. That's an extreme example of the common phenomenon of first past the post electoral systems leading to hugely unrepresentative outcomes, when there are more than 2 parties. Similar things have happened in other recent UK and Canadian elections (e.g.- the Liberals won the last 2 Canadian elections without even getting a plurality of the vote).
2 above isn't the only imbalance in the election results. The Liberal Democratic Party turned 12% of the vote into 71 seats, while the Reform Party got a mere 5 seats from a larger share (14%). I shed no tears for Reform, who are horrible right-wing populists. But if you think seats should roughly correlate with vote share, this kind of result should annoy you. The UK election system actually has a much greater skew towards unrepresentativeness than the US does, at this point. Ditto for Canada. The US House mirrors the popular vote pretty closely. the presidency and the Senate deviate more, but not as much as the UK and Canadian parliaments.
Credit where credit is due: Labor leader Keir Starmer largely purged Labor of his predecessor Jeremy Corbyn's socialism and anti-Semitism, and made them at least reasonably moderate. He also has some good YIMBY proposals to deal with the UK's housing crisis (which is similar to ours in its nature and causes), and promises to avoid raising taxes or budget deficits (I have doubts whether the latter promises can be kept). On foreign, policy (especially the Ukraine war), he's also generally good. The Labor Party does have mediocre to awful policies on many other issues.
Despite Starmer's successes in making Labor more palatable, the election result was more a repudiation of the Tories than an embrace of the opposition. The combination of inflation/cost of living issues and exhaustion with the Tories after 14 years in power did them in. Labor got only a slightly higher share of the vote than in the last election. But the Tory vote collapsed to its lowest level in decades. Over the last few weeks, I have had occasion to interact with quite a few Brits who usually vote Tory, but said they couldn't this time, and even that the party deserved to lose. Systematic polling data points in the same direction as these possibly unrepresentative anecdotes.
The Tories lost many voters to Reform. This may well tempt them to move in a right-populist direction. I hope they won't. A right-wing nationalist Conservative Party would be awful. It's also not clear this will benefit them at the ballot box more than it hurts. The price of gaining voters from Reform might be losing other votes to Labor and the LDP.
One thing the British do better than us is transitions: Within 24 hours after the election, the old government is out, and the new one in. I understand a presidential system cannot do things this quickly. But we should do it faster than we do.