The grammatical distinction between the speaker (1st person), the one being spoken to (2nd person), and the one being spoken about (3rd person).
In German, verbs are conjugated differently depending on the person.
Examples
1st Person Singular: ich gehe (I go)
2nd Person Singular: du gehst (you go)
3rd Person Singular: er/sie/es geht (he/she/it goes)
Ich gehe zur Schule.
I am going to school.
Du gehst zur Schule.
You are going to school.
Er geht zur Schule.
He is going to school.