Excited state are labeled relative to the lowest configuration by the number of harmonic oscillator quanta.
This truncation is useful because if one includes all configuration up to some \( N_{max} \), and has a translationally invariant interaction, then the intrinsic motion and the center-of-mass motion factor. In other words, we can know exactly the center-of-mass wavefunction.
In almost all cases, the many-body Hamiltonian is rotationally invariant. This means it commutes with the operators \( \hat{J}^2, \hat{J}_z \) and so eigenstates will have good \( J,M \). Furthermore, the eigenenergies do not depend upon the orientation \( M \).
Therefore we can choose to construct a many-body basis which has fixed \( M \); this is called an \( M \)-scheme basis.
Alternately, one can construct a many-body basis which has fixed \( J \), or a \( J \)-scheme basis.