How to Use a Capo and Understand the Real Chords
A capo presses down every string at once on a single fret, physically shortening the neck - the same open shapes (see [[first-chords-to-learn:the article on your first chords]]) now sound higher by exactly as many semitones as the fret the capo sits on.
What a capo physically does to the sound
A capo on the second fret raises every open string's pitch by two semitones - a guitar with a capo on fret 2 and an open Em shape physically sounds like F#m, even though the fingers are placed exactly as they are for a normal open Em with no capo.
The shape and the real sound are two different things
Tabs and chord charts with a capo often list two rows: 'play as' (the shape your fingers hold) and 'sounds as' (the real chord once the capo is accounted for). Mixing the two up is the most common reason a guitarist ends up playing the 'wrong' chords from someone else's chart - either they forgot about the capo, or confused which of the two rows was meant.
A capo as an alternative to transposing in your head
Instead of recalculating every chord in a progression by hand (see the article on transposing), a capo does the same thing physically - the familiar open shapes stay the same, and a different key comes out. This is especially convenient for songs built on open, ringing chords that would only be available as barre shapes in other keys.
How to work out what's actually sounding
The fret number the capo sits on is the number of semitones every chord is raised by (see the article on intervals). Play a G shape with the capo on fret 3, and it actually sounds three semitones above G, which is Bb. Count from the shape's letter name rather than trying to memorize a ready-made table.
When a capo doesn't fit the job
A capo only raises pitch, and only for the whole instrument at once - if a song needs a lower sound than standard open tuning gives, or a different tuning for only some of the strings, a capo doesn't solve it, and other tools are needed instead (retuning the instrument, transposing in your head).
Try it in practice
Open chord trainer