In poker, "position" is the concept that defines how near you are to the dealer button. A player's position relative to the dealer button is important because it determines the betting order. In all but the pre-flop betting (due to the blinds on the first betting round), the player with the dealer button will be the last one to act. This provides the strategic advantage of seeing what other players do before committing to a course of action.
In poker strategy discussions, you will see "position" categorized as either "early", "middle" or "late". We call 'late position' the seat on the button and the 2-3 players just before it (counterclockwise from it). Early position is the players in the blinds and the first 2-3 players to the left of the blinds. Note: we say '2-3 players' for two reasons. First, not all poker players agree on exactly where the line should be drawn.
Second, the number of players in the game also impacts position. For instance, in a 5-handed game, 'early position' would generally be considered just the two blinds, in a 10-handed game the player just after the big blind is often considered to be in early position as well (there are still seven people to act after him).
Position is crucially important in all forms of poker, but particularly in Hold'em. Consider the very simplistic case where the river card has come down, you have the nuts and have just one opponent left. If he bets, you raise. If he checks, you bet. In short, you get to put one more bet in no matter what he does. Conversely, if you have the nuts but have to act first, you can bet and he may call or fold. You can try for a check-raise, but then your opponent might simply check behind you.
As another example, suppose that you call in early position with a marginal hand (such as a pair of 7's or 8's). If there is a raise behind you, you have gotten into an undesirable situation. But if you have that same pair of 7's or 8's in late position, then you can see how many players you may be up against if you raise. The general principle is that you need stronger hands to play from early position than you do from late position. If you play a hand from early position (knowing your bet could be raised or even re-raised) - you want it to be a strong one. Conversely, in late position you have the knowledge of what most of the players at the table have already done working to your advantage.
Source:
http://www.chrismoneymaker.com/poker/texas-holdem
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