As interesting as it is, CAGED in guitar playing, is more of just a label, than a method. And CAGED actually stands for each letter that corresponds to a guitar chord, C-A-G-E-D. These five major chords establishes its connection with the guitar.

Basically, these five letter chords are the only open major chords that can be used to play in an open position. Aside from the minor ones like E-minor, A-minor and D-minor, these five major chords can also create some good shapes and patterns, that can be well demonstrated on the guitar neck. Also, each chord has a corresponding shape (and its pattern), as well as a scale. Now when you're playing a few keys from your guitar, it'll be good to know that you're well-familiarized with the CAGED label (especially with the shapes and patterns part).

When it comes to the CAGED label, it'll also work to your advantage (especially when it comes to any key in the guitar) if you knew all the shapes and patterns involved with all five chords. To put these all to your memory will work wonders. You'll be able to play just about any key if you really familiarize yourself with all the shapes and patterns used under the CAGED label. Not only will you learn a lot of patterns from the guitar, you can also shift these patterns around without having to worry about what key/s you're actually on.

To give further details on this subject, you can learn a few more things from having the F key as an example. You should know that by using the F key with another chord, you'll be able to stretch this out into patterns that can actually be used for making guitar leads. Variations for the F key (or for any key) can also be made useful for things like playing a song, using a second guitar with a guitar clamp. With the F key, you'll also be able to use and play these in five variations (using each of the five major chords). The first variation for it can be combined with an E shape (at the first fret). The second variation is combined with a D shape (at the third fret). The third variation is combined with a C-shaped (at the fifth fret). The fourth variation is combined with an A shape (at the eight fret). Last but not the least, the fifth variation, which is combined with a G shape (at the tenth fret).

As complicated as this concept may be, and given that this is just a short rundown on the idea, CAGED shouldn't be mistaken for being a method. It's a CAGED label (along with its other minor categories), since it's more of a labeling pattern, and an approach for remembering certain guitar combinations.