Estimation plays an important role when we talk about the product backlog. Estimating is about creating a SHARED understanding of the requirements, and a shared understanding of the SOLUTION. When teams have problems estimating, it’s almost never an estimating problem, it’s a shared understanding problem. Estimation can be done at two levels:

• Product Backlog level – Estimation at the product backlog level helps the team to predict much can they DELIVER in said time, it can be a release of three months or six months or as PER the product need. It also helps the product owner in making prioritization decisions. Another purpose to estimate items on the product backlog is that team members become more well-informed about the detail by thinking about it enough to estimate it.
• Sprint backlog level – Estimating at the sprint backlog level helps the teams to understand how much work they can pull into a sprint. The estimates at the sprint level are more precise which increases the possibility of the team completing all they say they will. In addition to it, this also helps the team to better synchronize their work.

When the team estimates at the product backlog level, it gives a rough or a high-level estimate, this GETS further refined when they estimate at the sprint level.