@SK
Well, it works like this.
If a character can have a few advantageous moves over another character, by speed, priority, or power (or finishers), then that character is said to counter the other character.
Take, for example, MK vs. G-dawg-er,,,,Gannondorf. WHile Gannondorf might have superior attacks as far as power goes, his priority and speed are so terrible that MK can just abuse his insanely fast ariels, tilts, and Smashes to utterly destroy Gannondorf.
However, there are other limiting factors here...
If a character has a projectile, such as Falco's Laser, then it can turn the tables, as it helps with spacing and damage, and Falco has enough finishers.
It;s kinda hard to explain quickly, but yeah, you get the gist of it.