Cholesterol is needed by our body to produce hormones and for cell membrane, and for other different functions. So our body produce suffcient amount of cholesterol itself, to perform its functions. Problem begins when we start to eat foods containing plenty of saturated fat, trans fat and cholesterol. Usually when you eat this food in controlled amount, body just produce less cholesterol and since it tries to make as much as it needs only, cholesterol level is controlled in your body automatically, but in cases when we don't eat too much saturated fat, trans fat and cholesterol. When we start to take in excess amount of those foods then body is overloaded with cholesterol and body mechanism fails to regulate its level.
So that is why those of us who are overweight already shouldn't eat saturated fat and cholesterol beyond the limit. But every cholesterol is not bad for our health.
Now lets talk about bad and good cholesterol. Cholesterol is not fully soluble in water. So how will it be transported through water based blood? Lipid protein is the medium through which cholesterol is carried. LDL and HDL are two mediums. LDL carries higher concentration of cholesterol along with lipid. HDL carries lower concentration of cholesterol. Since LDL carries high concentration of cholesterol, it drops some cholesterol at different part of artery, which you call as plaques. They are accumulated and narrow down the artery. But HDL can carry those cholesterol and send it to liver and help to release from body. That is why we need less LDL. Also we should not mind if HDL is a bit high in our cholesterol. Since the LDL is the reason of blocking in artery it is called bad cholesterol and HDL help to remove them, that's why HDL is called good cholesterol.