I usually see pictures like the one above, with chords above the bars.
Like, in the first one for example, it says "Am" directly above the 7th fret of the D string
How is that an Am? Am is made up from 3 notes, not 1. Unless they mean Am scale.
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Chord symbols are written in as they represent what is played at that point. It may be for a full bar - as in the 1st bar here, (wrong!) or shared half and half as in the 2nd bar here.
The 1st bar is Am to start with - despite what you think! The 2nd bar is half Am/G,(wrong again!) then D/F♯. Those are chord symbols - for whoever's playing rhythm chords, on guitar, piano.
Play the tab, though, and let ring, like it says, and you'll be playing a version of the chord shown. Notes A C E A are there. Surely that's Am! The 2nd half actually isn't Am, though. It's E+. And the 3rd's C, rather than Am/G, but by playing the notes under D/F♯ (all four of them), you'll be playing a D chord with F♯ at the bottom - which is exactly what it says to play! Some tabs are more accurate than others - find a better one. Or better still, don't rely on tab - use your ears, learn more about how the notes work together, and it'll benefit you in the long term. Good luck!
Am is made up from 3 notes, not 1. Unless they mean Am scale.
Am doesn't refer to the 1. note: as you are playing the 4 strings (the tones you play are A,C,E,A) and the chord label Am refers to this whole passage till the next chord respectively the next bar.)
Your question to Tim's answer:
how would you go into knowing what scale is the song in your head using? (I am guessing you just try every scale or memorize the sound of the scales?
and my comment here again:
You have to train your ear by playing many songs and - like Tim says - playing scales. It is the result of experience that your ear will recognize the scales and chords contained in a melodic phrase. I've read today an interesting posting:
"As a truffle hound roots around after fungus so the ear hunts melody."
This means: Your "ear" (your melody-recognition ability and melody-memory) must be trained like the nose of a truffle hound! ;)
The chords reflect the harmony for the amount of time until the next chord symbol shows up. Sometimes all the notes in the chord will be played, sometimes they are implied. Sometimes another member of the band will play notes that help make up the chord. If you wanted to play the song without playing the part exactly as written you could use the chord symbols as a way to do this.
This looks like Stairway to Heaven. The individual notes being played are from the chord listed above that section. In the first example the sequence (7, 5, 5, 5) on the top 4 strings is actually the Amin chord note for note (A, C, E, A). The same is true for the Amin/G (or A-7) and the D/F# (D maj first inversion). The purpose of listing the chords above the arpeggios is to help the reader understand the structure of the song and to some extent it helps with fingering. When playing the arpeggio one can simply hold down the chord rather than finger each note individually. I'd point out that the second chord is NOT strictly an Am and the pattern breaks there (by second chord I mean the second group of 4 notes in measure 1, not the Am/G). The second arpeggio is (G#, C, E, B) close to an E chord (the V of Am). So the progression could be thought of as i-->V-->i-->IV in the key of Am. I do this all the time when I arrange classical pieces for beginner students. I teach them to search for the chord form that best fits the notes (if possible) and place that chord over the measure or note group. Then, before playing the tune in arpeggiated form we go through the changes just strumming. This gets the left hand familiar with its job before putting the right hand to work.