Given the alphabet $\{a, b, c\}$, how many words can we form with 4 letters?
Assume you have the alphabet $\{A,B,C\}$ and you want to form words of length 4.

For the first letter you have 3 choices, $A, B$ or $C$. For the second letter you have again 3 choices, $A,B$ or $C$ and so on. In total: $ 3 \cdot 3 \cdot 3 \cdot 3 = 3 ^ 4 = 81 $ possibilities.