The main thing that is changing overnight is the amount of water in your system. It's amazing how much water weighs! A gallon of water weighs 8 pounds, and a pint of water (16 ounces) weighs one pound (in metric, a liter of water weighs a kilogram). Which is unbelievable - it means that if you drink a one liter bottle of soda, you instantly gain a kilogram (2.2 pounds) from the water! That's a big weight change and it can happen very quickly.

Overnight there are 2 processes that cause you to lose water gradually. The first is respiration. Each time you exhale you lose a little bit of water (exhale onto a cool piece of glass and you can see this moisture). The second is transpiration through the skin, also known as sweating. Over the course of a night, both of these processes eliminate quite a bit of water.

Then there is the tradition of using the restroom prior to the morning weighing. That process can eliminate up to a pound (0.5 kilogram) of water.

This page about the MIR space station indicates that the average person eliminates about 1.2 liters of urine each day, and also eliminates 1.5 liters a day through perspiration and respiration. That's 2.7 kilograms (over 5 pounds) of weight fluctuation happening throughout the day!

You may have heard that it's important to drink 8 or 10 glasses of water every day (see this article and this article for an example). Respiration, transpiration and urination are the reasons why!