A cladogram is a diagram that shows the evolutionary relationships between species by depicting lineages and their shared common ancestors. It represents groups of species that share a single common ancestor as clades. Derived characteristics are traits that evolved in a common ancestor and were passed down to its descendants, helping to determine how species are related on the cladogram. The example shows how to build a cladogram by determining which species share certain traits like legs, fur, being carnivorous, or having retractable claws.