Waves are mainly caused by two things. Wind, and the gravitational pull of the sun and moon on the earth. Although, other outside forces may cause hazardous waves. From hurricanes, to earthquakes, to volcanic eruptions- waves - as you can tell, can be caused by multitudes of forces.
Waves are not, as one might think, just giant walls of water-although, that is what we see on the outside. Waves are actually energy. "Waves are motions that carry energy over a medium." Meaning, ocean waves travel on the surface of the water.
Each water molecule will move in a full circle before it returns to its original position. "The water in the crest of the wave moves in the direction of the wave and that in the trough (the lowest point of the wave) moves in the opposite direction."
This page by Aubrey D.