Friction between rough surfaces occurs because, on the microscopic level, the surfaces have high and low area like hills and valleys. When they move horizontally past each other the hills of one surface interlock with the valleys of the other, similar to the way in which the teeth on gears interlock. It takes more force to push the hills past the valleys when both are bigger, as they are in rougher surfaces. A smooth surface has smaller hills and valleys.
There are also electrostatic attractions between surfaces, but these are weaker than the physical barriers to sliding.
Liquids such as water and oil reduce friction because they keep the two surfaces from contacting each other. The molecules in a liquid are free to move past each other so they don't present as much resistance to force.