Position in Texas Hold'em refers to where you sit compared to the dealer (the button).
Being in late position is good, because you have seen the actions of the players acting before you. And there are few players left that might have a better hand than yours.
Different poker writers have slightly different definitions of what makes up different positions, but the basic concepts are the same.
On this page are my definitions.
In general you should play very few hands from early position and a lot more from late position.
When there are few players at a table there might not be any players in early or middle position (or even late for that matter).
The big blind is last to act preflop and second to act after the flop (if small blind is playing)
The small blind is second to last to act preflop and first to act after the flop (if small blind is playing)
The dealer (button), the cutoff (one before the button) and the hi-jack (one before the cutoff) are the late positions.
When you are in late position you have a good opportunity to steal the blinds if no one has yet opened the pot.
The two positions left of the hi-jack are middle position.
The three first positions (on a full 10 seat table) are the early positions. The first player to act before the flop is called under-the-gun (UTG).