SketchUp’s Inferences
If you’ve spent any time fiddling with SketchUp, you’ve noticed all the little colored circles, squares, dotted lines, yellow tags, and other doodads that show up as you move your cursor around your modeling window. All this stuff is referred to collectively as SketchUp’s inference engine, and its sole purpose is to help you while you build models. Luckily, it does. Without inferences, SketchUp wouldn’t be very useful.
Point inferences
Generally, SketchUp’s inferences help you be more precise. Point inferences appear when you move your cursor over specific parts of your model. They look like little colored circles and squares, and if you pause for a second, a yellow label appears.
For example, watching for the little green Endpoint inference (which appears whenever your cursor is over one of the ends of an edge) helps you accurately connect an edge you’re drawing to the end of another edge in your model. Here’s a list of them:

Endpoint (green circle)

Midpoint (cyan or light blue circle)

Intersection (red X)

On Edge (red square)

Center (of a circle or arc, dark blue)

On Face (dark blue square)
In SketchUp, lines are called edges, and surfaces are called faces. Everything in your model is made up of edges and faces.
Linear inferences
As you’ve probably already noticed, color plays a big part in SketchUp’s user interface, or the way it looks. Maybe the best example of this is in the software’s linear inferences — the “helper lines” that show up to help you work more precisely. Here’s a description of what they do:

On Axis: When an edge you’re drawing is parallel to one of the colored drawing axes, the edge turns the color of that axis.

From Point: This one’s a little harder to describe. When you move your cursor, sometimes you see a colored, dotted line appear. The dotted line means that your cursor is “lined up” with the point at the other end of the dotted line. Naturally, the color of the From Point inference corresponds to whichever axis you’re lined up “on.”
Sometimes From Point inferences show up on their own, and sometimes you have to encourage them.

Perpendicular: When you draw an edge that’s perpendicular to another edge, the one you’re drawing turns magenta (reddish purple).

Parallel: When the edge you’re drawing is parallel to another edge in your model, it turns magenta to let you know. You tell SketchUp which edge you’re interested in “being parallel to” by encouraging an inference.

Tangent at Vertex: This one applies only when you draw an arc (using the Arc tool) that starts at the endpoint of another arc. When the arc you’re drawing is tangent to the other one, the one you’re drawing turns cyan. Tangent, in this case, means that the transition between the two arcs is smooth.
One of the most important inferences in SketchUp is one that you probably didn’t even realize was an inference: Unless you specifically start on an edge or a face in your model, you always draw on the ground plane by default. That’s right — if you just start creating stuff in the middle of nowhere, SketchUp just assumes that you mean to draw on the ground.