The plot of the movie concerns the Transformers' battle with the gigantic planet-destroying robot Unicron.
Warning: Wikipedia contains spoilers
During the course of the movie, many of the classic Transformers were killed or recreated (allowing Hasbro to launch a new line of Transformers toys). The Decepticon leader Megatron, for instance, was left for dead and rebuilt by Unicron as a new robot called Galvatron. Transformers: The Movie marks an epoch in the history of the franchise, and began a series of storyline patterns that persist in the present day's Transformers toys and media.
The Autobot leader, Optimus Prime, was killed due to injuries sustained in a battle with Megatron. He passed on his leadership duties to Ultra Magnus. Magnus was unfit to lead, as the matrix of leadership was taken from him by Galvatron. Hot Rod later recovered the matrix, and used its power to destroy Unicron, while at the same time becoming Rodimus Prime.
See Transformers (television series) for descriptions of the characters.
Autobots introduced in Transformers: The Movie
Autobots killed in Transformers: The Movie
Decepticons introduced in Transformers: The Movie
Transformers: The Movie">Decepticons killed or "reformatted" by Unicron in Transformers: The Movie
Other characters introduced in Transforers: The Movie