The ear drum is in the middle of the ear and protects the inner ear from outer ear. Sound waves cause pressure variations in air. These vibrations and variations of air in the outer ear cause the ear drum to vibrate. The vibrations cause muscles to vibrate. They are converted into nerve signals and are sent to the brain.
If there is a perforation in the eardrum, there is a possibility of loss of hearing. It is not always the case.
When the hole in ear drum is big enough, it is possible that there is infection hampering movement of muscles touching ear drum. The nervous signals may not be functioning well due to infection in ear.
When there is a big enough perforation in ear drum, the air behind the eardrum also changes in pressure like the air in front of ear drum. SO the vibrations of the eardrum are altered. They are slowed down due to the interference of two pressure waves from inside and outside the eardrum. So the person cannot hear properly.