Where do the oxygen go? Is it consumed by a particular species? Is just not enough being made? Please explain.
Eutrophication arises from the oversupply of nutrients, which leads to over growth of plants and algae. After such organisms die, the bacterial degradation of their biomass consumes the oxygen in the water, thereby creating the state of hypoxia.
The oxygen is used up by bacterial decay of the plants and algae that overgrow when there is too much phosphorus or nitrogen available; the plants grow so quickly that they compete with each other for sunlight.
Any basic source on eutrophication, even Wikipedia, will talk about this extensively.