Placing ones left
index finger over all of a
guitar's strings is the
distinguishing feature of a
barre chord. Barre chords allow the chord to be played anywhere down the
neck of the instrument.
The key to a chords sound is the relative difference between each of the string's tone. Since at most four strings can be fretted the usual way (one for each finger), at least two of the strings on a six string guitar are left open, or unfretted. This also means that using the same fingerings at other positions along the neck will change the relative differences between the strings. The fretted strings change tones, but the open strings don't, and the chord won't sound right.
But since the barre chords fret every string, the relative differences stay the same at any position. That makes the barre chords movable and much more versatile. The downside is that they are harder to learn and require more finger dexterity. You'll need to keep a straight index finger while contorting your other fingers to their frets; you'll have to use your pinky much more.
These diagrams show how barre chords are played. F1 through F4 represent the fingers, starting with the index finger. The O's at the top of the first chord are open strings, and the X's are strings that aren't played.
An A-major chord with open strings:
X O O
+==============+
| | | | | |
| | | | | |
| | | | | |
+--+--+--+--+--+
| | | | | |
| | F1 F2 F3 |
| | | | | |
+--+--+--+--+--+
| | | | | |
| | | | | |
| | | | | |
+--+--+--+--+--+
| | | | | |
| | | | | |
| | | | | |
+--+--+--+--+--+
| | | | | |
A B-major barre chord, taken by moving the A-chord down two frets (the index finger lays across all the strings on the second fret):
X
+==============+
| | | | | |
| | | | | |
| | | | | |
+--+--+--+--+--+
| | | | | |
| F1 | | | F1 <-- index finger lays across here
| | | | | |
+--+--+--+--+--+
| | | | | |
| | | | | |
| | | | | |
+--+--+--+--+--+
| | | | | |
| | F2 F3 F4 |
| | | | | |
+--+--+--+--+--+
| | | | | |
Another method of playing higher chords is to use a capo, a device that clips onto the neck and frets the strings like your forefinger would with a barre. A capo, however, is difficult to move while playing, giving much less flexibility than using your finger.