What do phylogenetic trees show?

Hint: A diagram depicting evolutionary relationship among organisms is called a phylogenetic tree. It describes the lines of evolutionary descent of different organisms, genes or species from a common ancestor.

Complete answer:
Phylogenetic trees are useful in organizing knowledge of biological diversity and their classification into their respective categories. It tells about the relationship of an organism and various other things like the organism from which it is thought to be evolved, or the organism it is more closely related to, etc.
Two species that are more related have more recent common ancestors and the species that are less related have less recent common ancestor. In the diagram each node or branch point represents a divergence of the species which means that a single group splits apart into two dependent groups.
The most recent common ancestor of all the descended groups lies at each branch point in the diagram. The horizontal lines in the tree signify a series of ancestors that lead up to the species at its end. The roots of the diagram represent a series of ancestors that lead up to the most common ancestor of all the species and the trees.
The scientist generates a phylogenetic tree by comparing and analyzing many characteristics of the species or the other groups involved. The characters they include are external morphology, behavior, biochemical pathways, their protein sequences, DNA, internal anatomy etc.

Note: Phylogenetic trees are hypotheses and not the exact answers. They are revised and updated over a time as the new data comes up. Particularly nowadays as DNA sequencing is done our ability to compare genes between species has become better.