Close haul is best position for the sail when you tack back and forth to go up wind.  If you have pulled the sheet so much that the boom is pulled down, you will pinch the boat, and not sail as fast.  If you let the sheet out too much, you will not point as high as you could and will go a longer a distance to get up wind.  If you start to luff while on a steady course close hauled, you must either bear off or tack.  If pulling the sheet in stops the luffing, you were not sheeted in as much and should have been.  When close hauled, the clew should be over the back corner of the stern.

tack - change which side the sail is

sheet - the rope which pulls in the sail

bear off - to steer your boat away from the wind

leeward - the side away from where the wind is coming from

boom - the metal or wood rod at the bottom of the sail

pinch - aim too much into the wind

point - aim up into the wind

clew - bottom back sail corner

bear off - turn away from the wind

luff - flap

stern - back of the boat