A location is a physical place where appointments happen, for example a massage room or a hair salon. Usually a location has no capacity defined so it is available as long as there are bookable resources available at that location.
You might want to have locations with limited capacity, for example there are three massage therapists and one massage room with only two massage tables. Imagine that there are already two appointments in this room booking two massage therapists and two tables. There is still one massage therapist who are available but there are no free massage tables left. So naturally the therapist can not accept an appointment so she becomes unavailable too.
To enable a limited capacity for a location, please set the Capacity parameter.
Now please have a look at the following picture. Linda has an 9:00 - 10:00 appointment, and George has an 8:30 - 9:30 appointment. So during 9:00 - 9:30 both massage tables are occupied, thus making Karen unavailable even though she has no appointments at that time.
If we switch to locations overview, we will see that the location is fully booked for the 9:00 - 9:30 period.