Ah, theory and what to do with it. First of all, a capo is a device that clamps on to the neck of the guitar so as to raise the pitch (shorten the length of the strings) of the guitar. Without a capo, the guitar strings register EADGBE, low string to high. If you place a capo just behind the 3rd fret, then then strings are raised in pitch to GCFBbDG. How do we use that? Well, if the only chords you know are C,G and F, you can now play the chords Eb, Bb and Ab respectively. Does this make sense?
Now, when a chart says to place the capo at a certain fret, what it is telling you is that you can use some other chords to play the song in the original key. I hope this helps.

Tip of the day: create a note of the day game. Ex: find the note E on all the strings all over the neck. the next day, find all the F's. In 12 days you will have hit every note available.