Need an analogy?
In the same way that you develop an elevator pitch to describe yourself in an interview, your product positioning should be a simple, repeatable, unique way to describe your product and its value.
Why does it matter?
Product positioning allows for consistency across all internal teams on how to explain a product, and allows for product features to be explained through the benefits they provide to the user.
How does it apply?
In a competitive market it is critical to make it clear to your potential buyer what your product does, why it matters, and how it is different from your competitors. A clear market position allows your digital product to cut through the noise.