The process by which during development cells become organized in the embryo is called pattern formation. All embryos of a given species have a similar structure or body plan. How does occur? during development each cell must differentiate according to its position in the embryo, so that the "correct" cell types arise in the correct place. In other words, cells must know where they are in relation to other cells in the embryo. This is achieved by giving each cells a positional value in relation to the principle embryonic axes. Regional specification describes any mechanism that tells a cell where it is in relation to other cells in the embryo, so that it can behave in a manner appropriate for its position. Regional specification is essential for pattern formation. 

A key question in developmental biology is how cells become aware of their position.

What is the nature of the positional information they receive?

Several model systems indicate that cells may acquire positional values on the basis of their distance from a source of a morphogen.

A morphogen is a substance that can influence cell fate having different effects at different concentrations. In its simplest model, the positional information along an axis can be generated by the synthesis of a morphogen at a source at one end of the axis, and diffusion away from the source would set up a morphogen gradient. Cells at different position along the axis would receive different concentrations of the morphogen and this would induce different patterns of gene expression at different concentration thresholds. Such concentration-dependent patterns of gene expression would represent the "address" or positional identity of the cell.

Read the book chapter "The developmental mechanics of cell specification" for a deeper understanding of this topic.

During development the establishment of an axis is often followed by segmentation. The axis is divided into repetitive series of similar but independent developmental units. Segments occurs in many species, from the obvious segmentation in the body of insects, to the rhombomeres and somites of vertebrate embryos. These segments can be considered as developmental compartments, in which the clonal expansion of a particular cell line is constrained. How can a cell and its clonal descendants be confined to a specific compartment? This may occur simply because there is a physical barrier to cell mixing, or compartments may be defined by patterns of gene expression in the absence of any obvious boundary. Homeotic genes give cells their positional identity. Different combinations of homeotic genes are expressed in response to different morphogen concentrations. The homeotic genes encode transcription factors that regulate downstream effector genes controlling differentiation and morphogenesis. Homeotic mutations cause cells to be assigned incorrect positional identities, resulting in the development of regionally inappropriate structures.