Intonation is how well it plays in tune along the neck. Adjust it so the guitar plays in tune at the 12th fret by varying the bridge or saddle distance.
"Intonation" means setting up the guitar so it plays as closely as possible to true pitch, making tiny changes to the working string length, usually by adjusting the bridge contact point. Changing the brand or gauge of strings can be enough to upset the intonation.
Intonation refers to how in tune with itself the guitar is. If you have worn out frets, or an imbalanced bridge, or an uneven nut, or even a slightly crooked neck, fretted notes may not be in tune with open strings.
