A circuit diagram draws wire as a line with no properties. Real cable is a resistor you did not intend to install, and on a long run at high current it takes a share of the supply before the load sees any of it.
voltage drop = (2 × ρ × L × I) ÷ A
The two is there because the current goes out and comes back, so the conductor length is twice the run. Twenty metres of 2.5mm² copper carrying 16 amps drops 4.48 volts, which the voltage drop calculator puts at 1.95 per cent of a 230 volt supply.
Three ways to make it worse
Double the run to 40 metres and the drop doubles to 8.96 volts, or 3.90 per cent. Length and current both enter linearly, so a longer run or a bigger load moves the figure in direct proportion.
Area enters the other way. Going from 2.5mm² to 6mm² on that original 20 metre run cuts the drop from 4.48 volts to 1.87, or 0.81 per cent. Cross-sectional area is the only one of the four you can buy your way out of, which is why the answer to a voltage drop problem is almost always a thicker cable rather than a shorter one.
Material matters too. The same run in aluminium instead of copper drops 7.22 volts rather than 4.48, because aluminium resistivity is 0.0282 against 0.0175. Aluminium is still used for long runs, where its lower cost and weight outweigh the extra area it needs, but swapping material without resizing is how an installation quietly fails its drop limit.
Low voltage is where it bites
Here is the case that surprises people. Take 12 volts, 16 amps and only 5 metres of that same 2.5mm² cable. The absolute drop is just 1.12 volts, a quarter of the first example. As a share of the supply it is 9.33 per cent.
That is the whole story of low voltage systems. Campervans, boats, solar setups and LED lighting all run at 12 or 24 volts, and the loads draw correspondingly large currents for the same power. Percentage drop scales inversely with supply voltage, so a cable that would be invisible on mains wiring is a serious problem at 12 volts, and the symptoms are dim lights, a pump that will not start, and a battery that appears flat while it is not.
Sizing rather than checking
Running the calculation in reverse gives the conductor you should have specified, which is what the wire size calculator does from current, length and an acceptable drop. Both pages are reference arithmetic using standard resistivity values rather than an installation design, and wiring rules, derating for grouping and insulation temperature, and the permitted drop itself are all set locally. For anything that will be energised, a qualified electrician and the local standard are what govern.
For the general case of resistance in a network rather than in a run of cable, resistors in series and parallel covers the other place where this arithmetic turns up.