The Three Dimensions of Chess
According to Kasparov, chess has three dimensions: material, position and initiative.
Material is simply the balance of pieces. Note that many people regard the bishop as being a little stronger than the knight. Having two bishops against the opponent's two knights could be seen as being a pawn up.
Position refers to king safety, badly or well positioned pieces, central control, space advantage, pawn structure and so forth.
The initiative refers to the dynamic aspects of the game: who has the initiative, tactical chances, and the trend of the game. The trend refers to whether Black or White is currently improving their position. Note that the player whose position is currently better may be moving in a downwards direction relative to the opponent, eg White has developed more quickly but fails to exploit this temporary advantage. The psychological aspects of initiative include which player feels in control of the game, whether they have the feeling that their position is improving, and which player is feeling more pressure.