Out of position means that a player will act before his opponents and have to make decisions without knowing what other players will do. Therefore, being out of position is considered a big disadvantage.
For example, if you raise from the cutoff hoping to steal the blinds or play a pot in position when the big blind decides to call, but suddenly the button calls your raise, you are left playing the hand out of position against the button.
It is worth mentioning that in a multi-way pot, you can be in position against one player and out of position against another. If we take the previous example where you raise from the cutoff and button calls as well as the big blind, now you are in position against the big blind but out of position against the button. That said, the position is usually absolute, so you either have a position on all players or can still be considered playing out of position since you will have someone left to act after you. This is why many players emphasize who is in and out of position when describing the hand.
Having a position is one of the biggest advantages at the poker table, so you should play as few hands out of position as possible and avoid getting involved with mediocre holdings.