Air resistance is the resistance of air to the movement of an object. When a ball is dropped, it experiences air resistance that opposes its motion. This air resistance causes the ball to lose velocity as it falls.
The deformation of the ball is another factor that contributes to energy loss. When a ball hits the ground, it deforms. This deformation absorbs some of the ball's energy. The amount of energy lost due to deformation depends on the material from which the ball is made. A ball made of a hard material will deform less than a ball made of a soft material.
Therefore, a ball does not bounce as high as it is dropped because of energy loss due to air resistance and deformation.