Shifting of Gears: To obtain different size combinations of gears, the gears slide on their shafts to mesh with different gears. The position of different gears, e.g. 1st, 2nd, 3rd, etc.
Neutral Position : In neutral position, the fixed gears M1 and M3 move (rotate) free gears C1 and C3, respectively but since, we know that gears C1 and C3 are free hence, they cannot rotate the counter shaft, hence, no power is transmitted to wheels.