The 4 point system is a widely used method for fabric quality inspection in the apparel industry. It involves 5 key aspects: 1) the inspection method, 2) criteria for assigning penalty points based on defect length, 3) calculating total penalty points, 4) a check sheet for recording data, and 5) knowledge of defect types. The system assigns penalty points based on the length of defects or size of holes. An example calculation shows how to determine the total penalty points per 100 square yards to evaluate if the fabric meets acceptable quality levels.