Everyone who has ever taken a science class knows the word "hypothesis," which means an idea, or a guess, that you are going to test through an experiment. A hypothetical is related to that. It means something based on an informed guess.
Hypotheticals are fun. How would you do in a hypothetical arm-wrestling competition against your Grandma? There are people in the Pentagon whose jobs are to consider all kinds of hypotheticals––what if Luxembourg armed itself with nuclear weapons? What if France developed the ability to pelt Switzerland with cannons firing cheeses?