A torque converter is a piece of equipment used in engines to change up-and-down piston movement to rotational movement. This rotational movement -- or torque -- can then be applied to things such as car wheels, boat propellers and other pieces of machinery that need to turn in a circular motion to function. There are a number of factors that can cause a torque converter to wear out, from overheating to the stator clutch breaking to the blades breaking apart.
Torque converters use fluid to function. This fluid drives the impeller in one direction, goes through the stator, then goes through the turbine in the opposite direction, thus converting the speed of the impeller to torque in the turbine. This fluid also cools the torque converter.
The stator moves with the flywheel; although its name suggests that it is immobile, it is not actually. It is just immobile in relation to the flywheel. This means that if the flywheel moves through the wheels moving, the stator will move too, but if the engine isn't running it will not be lubricated. So, if you tow your car with a torque converter at high speeds the stator will move too quickly without oil, overheat and quickly break.
The stator clutch is a one-way clutch. It is the piece of equipment that keeps the stator moving with the flywheel and not in the opposite direction. If it moves in the opposite direction the fluid will not be able to pick up any momentum and therefore will be unable to convert power into torque. This will not affect cruising, but it will have a major effect on acceleration. You can drive on the highway, but good luck merging.
The major cause of the stator clutch breaking is a major shock to the engine. If you try to tow a load that the engine isn't equipped to handle, the stator clutch will break. The same goes for if you accelerate too quickly in too low of a gear. The sudden, unexpected power will break the stator clutch.
Overheating is another problem that can affect torque converters. Sometimes there are large amounts of slippage, which is when the torque converter becomes less efficient due to the turbine or impeller slipping in the opposite direction. The torque converter relies on consistent movement to spread heat out, and concentrated heat can melt the seals that hold the fluid inside the converter.
Slippage and overheating also affects the turbine and impeller blades. If they melt or otherwise change their shape they cannot distribute fluid as efficiently. This makes the torque converter less effective and eventually renders it completely ineffective.
