What are capacity and velocity in your plan?

Capacity in your plan refers to the number of story points or hours your team can complete in one iteration. For example, a team with a capacity of 30 story points (which is the default setting) can contain six work items that are estimated at five story points each during one iteration.

Velocity, which only exists within your plan, is your team’s average capacity per iteration over time based on past performance. For example, a team with a velocity of 30 story points will require two sprints to complete an epic estimated at 35 story points, assuming no other work was already assigned to those sprints.

Together, these two features ensure that your plan is realistic based on how quickly your teams are able to work.