Possession refers to when the buyer actually takes physical control of the property and can move in. While it often coincides with closing, the exact date and time are set by the purchase contract and can differ from the closing date.
Sometimes a seller needs extra time to move out after closing, arranged through a post-closing occupancy agreement, often called a rent-back or use-and-occupancy agreement, where the seller pays to stay temporarily. In other cases, possession is delivered immediately at closing when keys change hands.
Spelling out possession terms clearly prevents disputes. Issues like who bears risk of damage between closing and possession, and what happens if the seller fails to vacate on time, should be defined in the contract.