An underdog is the team or individual expected to lose a particular event. For example, the Denver Broncos are a 7-point underdog against the Kansas City Chiefs, which means they are expected to lose. If the Broncos win as an underdog, it's considered an upset.
An underdog can be bet on the moneyline or spread. In the above game, the Broncos could be a +180 underdog to win the game outright. While a moneyline bet on an underdog is more difficult to win, it also results in more money won as opposed to a spread bet, which requires the underdog to loss by a set number of points if they don't win outright. Spread bets such as +7 can have odds ranging from +110 to -110 or even +120 or -120, depending on the sportsbook.