Let's talk about the capo. One of my students and I had a discussion on this last week and I thought it would be a cool lesson topic.
First off, what is a capo? Well, a capo is a guitar player's secret weapon and a songwriter's best friend. And capo is a tool that clamps onto the neck of a guitar and allows you to play open chords in a new key (remember that phrase). The strings of a guitar are tuned - starting on the 6th/thickest/lowest in pitch string - E A D G B E. So if you were to play an open E chord right now, you would, as I already said, be playing an E chord.
Now if you put the capo on the first fret and play an E chord, you are no longer playing an E chord. You are playing an F chord but still using the E chord shape, also known as an E-shape chord. What happened when you put the capo on the first fret is that you raised each string by one half-step. E became F, A became Bb (the "b" is a flat sign), D became Eb, G became Ab, B became C, and E became F. You effectively moved the nut of the guitar up one half-step and eliminated any note below the first fret. Make sense?
If you were to put the capo on the third fret, you have eliminated the ability to play any note below it and the strings go from E A D G B E to G C F Bb D G, or up a three half-steps (also known as a minor third). And an E shape chord becomes a G chord.
Since the guitar is not tuned to a key, the capo doesn't change the key of the guitar - it changes the key of only the open chords. If you have a capo on the third fret and you play a bar chord on the fifth fret, that bar chord doesn't change because you are not using any of the notes that the capo adjusted. Take the capo away, and you're still playing the same chord. Isn't guitar cool?
I hope this makes sense and proves to be useful to you!