When I put on my brakes to slow my car I am swapping kinetic energy for heat energy. The brakes heat up, the car slows down. One form of energy has been converted into another form of energy. Kinetic energy is lost, heat energy is gained. Cool (heh).
Stars are formed (very simply stated) by gravitational condensation of matter. Formation of a star results in heat. Thus, ISTM, gravitational energy has been converted into heat energy. Clearly heat energy is gained but WTF has happened to gravitational energy? Lessened somehow?
The equally oversimplified answer is that you are describing entropy. Every form of energy gets eventually converted into heat. And this will eventually result in the heat death of the universe.
Gravitational energy is not directly involved in star formation, but indirectly as gravity allows fusion to develop. In the very long term, though, since gravity is dependent on concentrations of mass and the heat death requires an even distribution of energy, the transformation will eventually be made.
The “potential energy” of matter is concerted into kinteic energy.
When you raise something in a gravitational well (i.e.lift a weight to the second floor) it takes energy. When you let that thing go, it gains speed (kinetic energy)until it hits the ground and transforms that kinetic energy (nmotion) into heat and sound waves. As a gas ball gets denser, heat is released - until enough heat and pressure in the center causes fusion - hydrogen fuses into helium (etc. actually a bit more complicated) releasing a heckuva lot more energy that from compression.
So matter evenly distributed in wide space has a lot more potential energy than when it all gloms together due to gravity.
BTW, one of the big drivers of internal heat in the earth is radioactive decay. Yea, there’s not a lot but there’s a huge ball 8000 miles in diameter, and the heat cannot easily escape…
Yes, the gravitational energy is lessened. Everything got lower with respect to everything else. Everything fell toward everything else.
There are other things going on - heat causes radiation outward, and eventually triggers energetic reactions. Also pressure builds up, and that stores energy too, a squeeze of the spring. But the gravitational part of it all got lessened.