In response to falenas108's "Ask an X" thread. I have a PhD in experimental particle physics; I'm currently working as a postdoc at the University of Cincinnati. Ask me anything, as the saying goes.
This is an experiment. There's nothing I like better than talking about what I do; but I usually find that even quite well-informed people don't know enough to ask questions sufficiently specific that I can answer any better than the next guy. What goes through most people's heads when they hear "particle physics" is, judging by experience, string theory. Well, I dunno nuffin' about string theory - at least not any more than the average layman who has read Brian Greene's book. (Admittedly, neither do string theorists.) I'm equally ignorant about quantum gravity, dark energy, quantum computing, and the Higgs boson - in other words, the big theory stuff that shows up in popular-science articles. For that sort of thing you want a theorist, and not just any theorist at that, but one who works specifically on that problem. On the other hand I'm reasonably well informed about production, decay, and mixing of the charm quark and charmed mesons, but who has heard of that? (Well, now you have.) I know a little about CP violation, a bit about detectors, something about reconstructing and simulating events, a fair amount about how we extract signal from background, and quite a lot about fitting distributions in multiple dimensions.
IMO “conversion of mass to energy” is a very misleading way to put it. Mass can have two meanings in relativity: the relativistic mass of an object is just its energy over the speed of light squared (and it depends on the frame of reference you measure it in), whereas its invariant mass is the square root of the energy squared minus the momentum squared (modulo factors of c), and it's the same in all frames of references, and coincides with the relativistic mass in the centre-of-mass frame (the one in which the momentum is zero). The former usage has fallen out of favour in the last few decades (since it is just the energy measured with different units -- and most theorists use units where c = 1 anyway), so in recent ‘serious’ text mass means “invariant mass”, and so it will in the rest of this post.
Note that the mass of a system isn't the sum of the masses of its parts, unless its parts are stationary with respect to each other and don't interact. It also includes contributions from the kinetic and potential energies of its parts.
The reason why the Sun loses mass is that particles escape it; if they didn't, the loss in potential energy would be compensated by the increase in total energy. The mass of an isolated system cannot change (since neither its energy nor its momentum can). If you enclosed the Sun in a perfect spherical mirror (well, one which would reflect neutrinos as well), from outside the mirror, in a first approximation, you couldn't tell what's going on inside. The total energy of everything would stay the same.
Now, if the Sun gets lighter, the planets do drift away so they have more (i.e. less negative) potential energy, but this is compensated by the kinetic energy of particles escaping the Sun... or something. I'm not an expert in general relativity, and I hear that it's non-trivial to define the total energy of a system when gravity is non-negligible, but the local conservation of energy and momentum does still apply. (Is there any theoretical physicist specializing in gravitation around?)
As for 2., that's the energy of the electromagnetic field. (The electromagnetic field can also store angular momentum, which can leading to even more confusing situations if you don't realize that, e.g. the puzzle in The Feynman Lectures on Physics 2, 17-4.)
Sean Carroll has a good blog post about energy conservation in general relativity.