Relative Estimation

Relative Estimation is a way of estimating work effort by identifying features/requirements with stories and then assigning story points to each story. The cumulative story points are the amount of effort to estimate the amount of effort required to deliver each story. The story points are then calculated against the team's velocity to create an estimate on how much the team can deliver in a particular iteration.

Definitions

According to the Agile Extension to the BABOK Guide (preview),

Relative Estimation. A way of estimating work effort by identifying features/requirements with stories and then assigning story points to each story. The cumulative story points are the amount of effort to estimate the amount of effort required to deliver each story. The story points are then calculated against the team's velocity to create an estimate on how much the team can deliver in a particular iteration.