Index fossils are used to define geological periods. These fossils can be defined as "commonly found, widely distributed fossils that are limited in time span." If one finds an index fossil in a given layer, then one has bounds on the age of the layer. Using index fossils, the geological periods are defined.
A fossil indicates the relative age of the rock in which it is found. Index fossils come from species that were widespread but existed for a relatively brief period of time.