STEP-BY-STEP ANSWER:
Step 1: Identify the ancestral traits (e.g., notochord, dorsal nerve cord) that are present in all chordates.
Step 2: Examine which derived characteristics (such as jaw formation in vertebrates) appear in later branches of the tree.
Step 3: Analyze how these unique traits are used to group species into distinct clades, differentiating vertebrates from invertebrate chordates.
Final Answer: Shared derived characters serve as evolutionary markers that define the branching points in the chordate lineage, allowing scientists to classify organisms into major groups such as jawless and jawed vertebrates.