The vital (and often confusing) idea is that in a graphics program there is one virtual world, but any number of coordinate frames might be in use. Often, each object has its own frame, a different frame is used to describe locations of objects, and another frame might be used for the viewpoint. This is something you already do all the time with the real world. The hard part is seeing how it works with a virtual world.
For example, say you have a vase set upon a table. You are talking to a friend over the telephone and wish to describe the vase, where it is, and how it looks to you.
You might describe the vase as a sphere centered at the origin intersecting a cylinder who's axis is the y axis. That is describing the vase in its own frame.
You might describe the location of the vase as "8 inches from the front edge of the table and 12 inches from the right edge." That is using another frame to describe a location.
Now you might talk about how you are viewing the table from a distance of eight feet and a height of five feet. That is using yet another frame to describe a viewpoint. You might walk around the table (admiring the beautiful vase) and now need another frame to describe your new viewpoint.
As you are out walking, a stranger approaches you and asks for directions to the post office. Which coordinate frame will you use: latitude and longitude (based on Greenwich, England), or the number of city blocks left and right of your current position?