THREE-POINT EDITING
What you have just been doing using the “insert” and “overwrite” buttons is called “three point editing”
-- What is 3 point editing?
With every edit you make, there are FOUR points involved:
- The IN point of the clip you want to add to your sequence
- The OUT point of the clip you want to add to your sequence
- These 2 points define the duration & what portion of the clip will be used
- The IN point in your timeline (where the clip will begin)
- And the OUT point in your timeline (where the clip will end)
Making a 3-point edit means that you are setting THREE of these points and letting the fourth point be determined by either the quantity of footage you want to put in, or the amount of space in your timeline that you want to fill.
When you were using the buttons in the Canvas window, you were setting two points (the “In” and the “Out” in the Viewer window) and then allowing the playhead [
] in the Timeline to act as your 3rd point (the “In” point.)
-- When/why would you use 3 point editing?
EX 1: You have a Close Up of an actor delivering a specific line. After the line is delivered, the actor raises their hand and you want to match that action as you cut to a Wide Shot of that actor.
You have the Wide shot in your timeline already, so you set an “Out” point in the timeline where the actor raises their hand. You load the CU into the Viewer window and set the “In” point where they start to deliver the line and the “Out” point where their hand is starting to be raised to the proper position. Now when you do an insert or overwrite edit, the “Out” point of the CU will match up exactly with the “Out” point you set in the timeline and the “In” point in the timeline will be determined by working backwards the duration of the CU.
EX 2: You have a sequence in your timeline that’s made up of three clips and you decide you don’t like the 2nd one, so you remove it and you’re left with an empty space in your timeline that’s exactly 5 seconds and 15 frames long. Now you want to put a different clip into that space and fill it exactly. How do you do this?
All you have to do is to set your “In” and “Out” points in your timeline/canvas window where the empty space is. Then you pull your new shot up into the viewer and pick the “In” point. By using 3-point editing, the 4th point (the end of the new shot) is determined for you without you having to count exactly 5 seconds and 15 frames and setting an “Out” point.
EX 3: Let’s say you have an interview with a lion tamer and, while he’s talking, you’d like to cut away to a great shot of a caged lion. You look at your shot and you realize you have a problem and the lion goes in and out of focus. You have exactly 8 seconds and 3 frames of footage that’s in focus and you want to use every bit of it that you can without showing any of the out of focus portion.
You set the “In” and “Out” points in your viewer window to only include the in-focus portion of the shot. Then, in your timeline, you know you want the shot to start as soon as the lion tamer says “the lion’s are very dangerous”, so you set an “In” point where you want to cut to the shot of the lion. There’s no need to set an “Out” point because FCP will figure it out for you.
-- Play your 20-second un-edited “Emery” clip in the timeline and set an “In” at the 11-second point and “Out” at 15-seconds. This will be where we want to cut to a 4-second shot of the Titanic.
-- Now, go to the very far left of your timeline in the “Track Controls” area and lock your audio tracks by clicking on the padlock 
next to both A1 and A2.
-- You should see diagonal lines running across both of those tracks.
-- Open up the “titanic” clip into your Viewer window or, if it's already in there, just select the Viewer window bly clicking on it and clear the existing "Out" point by clicking Option-O (make sure you're doing this in the "Viewer" and not clearing the points set in the Timeline/Canvas). Leave (or set) the “In” point at the very beginning of the clip.
-- Hit the “Overwrite” button 
in the Canvas window.
-- Hit the “home” button on your keyboard and play your entire timeline.
Since you locked the audio tracks, your original “Emery” audio remains intact, but now we see the footage of the Titanic while he’s talking. Make sure you unlock the tracks again before you move any of the “Emery” clip or you’ll accidentally put the video clip out of sync with the audio.
When you feel comfortable with 3-point editing and setting “In” and “Out” points in the Viewer and the Canvas/Timeline windows, undo all your edits (leaving only the 20-second “Emory” clip in the Timeline) and move onto page four.