Position is by definition the order in which people act during the hand. First position would be the small blind and last position would be the button. The later you act in a hand the better position a player is in. This will be explained more a little later. In smaller games position makes less of a difference than in larger games but when trying to learn the game knowing how to use position to your advantage will both save you money and make you extra money. For its most simple reasons acting last you will be able to have more information about what others have from the actions players take in front of you. During this hand you will have this advantage each of the 4 rounds of betting. Thus compounding your edge.
To give an example of how position plays apart of a hand ill use two players who both have AK suited. This is one of the best hands you can have in holdem. If the first person (player 1) raises and the second person (player 2) re-raises (3-bets) and everyone else folds and player 1 just calls the 3 bets. The flop is all small cards 2 2 7 and player 1 checks and player 2 bets this puts the player 1 in a very bad position because he has no idea what the other person has and if he decides to call he may be drawing very slim against KK or AA. Because of a strong possibility that a player may have a medium pair (88-JJ) the correct play is to call the flop. Now the player 2 seeing that player 1 has only called he can assume that player 1 doesn’t have a pair, thus his AK is the best hand. The turn then comes out a 9 and player again checks as player 2 then bets what he thinks is still the winner. Player 1 is then forced to fold because the pot odds wont allow him to call the larger bet. That’s one example of how position plays a part when two people have the same hand. One of the most common moves in holdem is raising with position to “get a free card”. Example: 5 people are in the hand and you are on the button with KQ of hearts and nobody has raised the pot pre-flop. The flop comes down 9-10-2 two hearts. The first person has bet into the field and one person has called. Because you act last during the hand you can raise, hoping its enough to scare others into just calling. If they do just call and not raise then your move has worked. If they re-raise then its failed but you will still have outs to win the hand. Assuming that both players have only called your raise you see the turn card. If it is not one of your outs; a heart, Jack which both give you the nuts or second NUTS ( the best possible hand with the board cards) even a King or a Queen would give you a strong hand, and both players check to you then you can check. This is your free card because if you had only called the flop the same player would usually bet the turn as well. Costing you 1 bet on the flop and 2 bets on the turn = 3 bets. By raising the hand it has only cost you 2 bets. It becomes even more profitable when you hit your outs. Because you will then be holding the best hand and would earn one more bet during the hand.