Sprint Planning is the first Scrum event that kicks off the Sprint.
Once the Product Backlogs items are ordered and are available to pull from, the Sprint Planning meeting is a collaborative activity between Scrum Team members (and the stakeholders) to identify “what” to deliver, and “how” to deliver it in the Sprint.
During Sprint Planning, a Sprint Goal is crafted and a Sprint Backlog is created.
Capacity-based sprint planning is also referred as Commitment-based sprint planning which uses team’s availability in terms of hours after excluding holidays, leaves, trainings, other task commitments etc., for the sprint. This capacity helps the team to commit to the work for a sprint.
The capacity of the teams may be different for each sprint depending on the above factors. This defines the team velocity. The story points (also relative sizing of the user story) and the team velocity are the parameters that help in estimating the sprint timelines and release planning.
Velocity is about the amount of work that has been finished by the team in a given sprint. Agile team uses “Velocity” for planning the subsequent sprints. This is a measure that helps teams to identify how the teams were performing in the past sprints and how much work can be completed in the future sprint. Velocity is computed by adding up all the story points which are moved to “done” status in a sprint.
Usually team’s velocity is an estimate calculated by taking average velocity from the last 3 sprints to determine the future sprint’s velocity.