A formation is the way in wich a team is lined up. A formation decides the number of defenders, midfielders and forwards. Formations can only be changed by repositioning. An example: "Inner midfielder 1" gets repositioned to play as an "extra central defender". He takes on the role of a centraldefender, just like an ordinary centraldefender. This means you've changed from the normal 4-4-2 lineup to a 5-3-2 tactic! Note that he's still called "Inner midfielder 1" (for ease of identification), but he plays in the position of a central defender. Without repositioning you will play with the basic formation 4-4-2.
The following are the most used formations. With these you can reduce the chance of confusion by playing them often and acquire formation Experience. 4-4-2 formation Experience is always at excellent.
Other formations can be used as well, but they won't gain formation Experience.