Allah created Prophet Adam from earth, then breathed soul into him. Allah taught Adam the names of all things — and when the angels were asked, they didn't know. Only Adam could answer. This shows humanity's honor: not through strength or size, but through knowledge.
Allah then commanded the angels to bow in respect to Adam. All did, except Iblis. Iblis was proud: "I was created from fire, he from earth." Because of his arrogance, Iblis was cast out of Paradise.
Adam and Hawa were allowed to live in Paradise, with one prohibition: don't approach a particular tree. But Iblis whispered temptation, and they ate from it. Realizing their mistake, Adam and Hawa immediately repented: "Rabbana zhalamna anfusana" — "Our Lord, we have wronged ourselves."
Allah accepted their repentance, but sent them down to earth as His vicegerents — not as punishment, but as a mission. From Adam and Hawa, all humanity descends.