Classification (also known as classification trees or decision trees) is a data mining algorithm that creates a step-by-step guide for how to determine the output of a new data instance. The tree it creates is exactly that: a tree whereby each node in the tree represents a spot where a decision must be made based on the input, and you move to the next node and the next until you reach a leaf that tells you the predicted output. Sounds confusing, but it's really quite straightforward. Let's look at an example.