In any chord, there are certain notes which tell you exactly what the chord is. In major and minor triads it is the 3rd (the 5th is the same in both chords) and in seventh chords, it is the 3rd and the 7th. These notes are referred to as guide tones. Here are various chords built on a C root note, with the guide tones indicated. Notice that these are the notes which change from one chord type to another, while the root and the 5th remain the same.
Play the following example and listen to the way the E (natural 3rd) and Eb (flattened 3rd determine whether the chord is C major or C minor.
In this example, both the 3rd and the 7th are necessary to indicate the chord types.
This example shows two guide tone lines for II V I progressions. Notice how the 3rd of one chord becomes the 7th of the next chord and vice versa. In the first half, the 7th is above the 3rd, while in the second half, they are reversed. The choice of which note is on top is up to the player, depending on the musical context.
Using guide tones makes it possible to create smooth chord progressions. The 3rd of one chord often progresses to the 7th of the next chord and vice versa. In the case of a m7b5 chord and a dim7 chord, the 5th can also be a guide tone, but in major, minor and dominant 7ths# the 5th can be omitted.