It tells you what is not possible. If not, it will give a position that spans 4 frets. Including this information is important for several reasons. Secondly, it tells you that a particular chord is not available in that area of the fretboard. This is important when arranging and writing and might indicate that you need to transpose the piece to a different key or change to an Open Tuning of your instrument.
Every song has a melody and a supporting group of chords in a specific sequence.
These factors determine the key of the piece. The sequence of chords is determined by the sequence of notes which make up the melody. Usually the first chord in a song is made from the beginning note of the melody. Some people find a particular song causes them to have to sing too high. Others find they have to sing too low.