Place value is a system that helps us understand the value of digits in a number based on their position. In this system, each digit in a number has a specific value depending on its place. For example, in the number 345, the digit 3 represents three hundreds, the digit 4 represents four tens, and the digit 5 represents five ones. This concept is essential for performing arithmetic operations and understanding larger numbers. Place value allows us to differentiate between numbers like 12 and 120, where the position of the digits changes their overall value. Understanding place value is fundamental in mathematics.