This means the annotation is placed relative to the data. In the first annotation, xycoords='data'.
The annotation can be located relative to the plot data, located relative to the axis, or located relative to the figure window. Each of the three annotations in the next figure has a different xycoords= keyword argument. The keyword argument to pay attention to in the next code section is xycoords=. ax.annotate('text', xy=, xycoodrs=, xytext=, arrowprops= ) Multiple keyword arguments can be passed to ax.annotate() method to specify the annotation location and style the annotation. Matplotlib's ax.annotate() method creates the annotations. The code section below builds a simple line plot and applies three annotations (three arrows with text) on the plot. Text can be included on a plot to indicate a point of interest or highlight a specific feature of a plot. Sometimes it is useful for problem solvers to annotate plots. Problem Solving with Python Book Construction