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When you've got your graphic in position, you might want to modify its position after you've seen it in place with the text. Now it would be useful to see what the graphic is positioned relative to.
Behind the scenes, when you position a floating graphic, Word is "anchoring" the graphic relative to whatever you've positioned the graphic by (paragraph, page, and so on). For example, if you've positioned the graphic relative to a paragraph, the anchor appears at the start of the paragraph. Even if you've positioned the graphic by dragging it where you wanted, it still has an anchor.
Note By default, floating graphics are absolutely positioned: horizontally relative to the column, and vertically relative to the paragraph.
You can see the anchor by clicking Show/Hide ¶ on the Standard toolbar. The graphic has to be selected to see the anchor.
You can move an anchor by dragging it to a different position in the document. This will only move the anchor — not the graphic. So in the newsletter example, if you split the paragraph that the picture is anchored to into two paragraphs, the anchor is then attached to the second paragraph. You want the graphic to be positioned relative to the first paragraph, so you could drag the anchor without moving the picture. Now you can add many new paragraphs, but the graphic remains in position anchored to the first paragraph.
Tip The graphic and the anchor must be on the same page. If you add or remove text and the anchor moves to another page, the graphic will join it. So you always want to position the anchor on the page that you want the graphic to appear on.