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It determines how much that digit is worth. See this article on place value. http://www.aaamath.com/plc.htm

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Why numbers system is call place value?

Because each position has an intrinsic value. In the number "111", the right-most "1" has a value of 1, the second digit from the right has a value of 10, the third digit from the right has a value of 100. The "place" of a digit defines its value.Because each position has an intrinsic value. In the number "111", the right-most "1" has a value of 1, the second digit from the right has a value of 10, the third digit from the right has a value of 100. The "place" of a digit defines its value.Because each position has an intrinsic value. In the number "111", the right-most "1" has a value of 1, the second digit from the right has a value of 10, the third digit from the right has a value of 100. The "place" of a digit defines its value.Because each position has an intrinsic value. In the number "111", the right-most "1" has a value of 1, the second digit from the right has a value of 10, the third digit from the right has a value of 100. The "place" of a digit defines its value.


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