Each organic result on a search engine results page has a numeric position counted from the top, starting at 1 for the first result after any paid ads. Average position takes every query and impression where a site showed up at all and averages those positions into a single number, most commonly seen in Google Search Console's Performance report. If a site never appeared for a given query, that query contributes no position to the average at all.
The average can be misleading on its own. A site ranking 3 for one high-volume query and 40 for a dozen low-volume ones can post the same average as a site ranking a steady 8 across the board, even though the two situations call for very different fixes. It also only counts queries where the page appeared, so a page with almost no impressions can show a flattering average built from a handful of lucky rankings. Search Console no longer shows rankings beyond position 100 for a given query, which narrows what the metric alone can tell you. Most practitioners now read it alongside impressions and clicks rather than on its own.
