A permutation refers to the number of ways to arrange a subset of items from a larger set where the order matters. It is used when you're forming sequences, rankings, or positions from a group of elements.
\[ P(n, m) = \frac{n!}{(n - m)!}, \quad (n \geq m) \]
Where:
\[ P(5, 2) = \frac{5!}{(5 - 2)!} = \frac{5!}{3!} = \frac{5 \cdot 4 \cdot 3 \cdot 2 \cdot 1}{3 \cdot 2 \cdot 1} = 20 \]
There are 20 ways to arrange 2 objects from a group of 5 in a specific order.