Positional notation is a method of representing numbers where the position of each digit affects its value. For example, in the decimal system, the number 345 means 3 hundreds, 4 tens, and 5 ones. Each digit's position tells us how much it contributes to the overall value, making it easy to understand and calculate. This system can be applied to various bases, such as binary, where only two digits, 0 and 1, are used. In binary, the number 101 represents 1 four, 0 twos, and 1 one, equating to the decimal number 5. Positional notation simplifies arithmetic and number representation across different systems.