A phylogenetic tree or phylogeny shows evolutionary descent from a common ancestor.
The tree is built by aligning DNA sequences and using an evolutionary model alongside a tree building method to cluster the sequences based on evolutionary distance (a measure of how closely related they are to each other).
A phylogenetic tree diagram is a powerful tool to show all vs all relationships between individuals, genes or species in a single plot.
Below is an example of a phylogenetic tree for a population of individuals.
The sequences are numbered 1–15 where each number represents a DNA sequence from an individual.
The sequences are represented as labels on the tree at the tips, also called leaves or OTU’s (operational taxonomic units). For simplicity we will stick with tips.

All individuals in the phylogenetic tree are related and the tree diagram illustrates the order of descent from a shared ancestral lineage.
Ultimately the individuals that are grouped together are more closely related.
When we are considering such a group in a tree diagram, if the group contains the last common ancestor of all of the group members we call this grouping a clade (see below) also termed a monophyletic group.

Tips are linked to their ancestors via nodes.
Nodes can be defined as the point where one lineage branches into two, where this lineage represents a hypothesised ‘evolutionary event’ such as population divergence (if we are considering a population tree), or speciation (if we are looking at a species tree).
In all cases a node can be thought of as a hypothetical ancestral state.
Rooting a tree gives us a direction time, this shows us the order of evolutionary change.
A phylogenetic tree is rooted by the tip or group of tips that are not closely related to the in-group of sequences. This group is called the out-group or basal group (see below).

When we are considering the most closely related individuals in the tree, we call them sister taxa. E.g below are 5 occurrences of sister taxa.