Links in this video:
Use the Circle to know which chords go well together in any specific Key. Want your own circle to print out? Download one here.
Take the key of G Major for example - locate the G on the outer wheel. The Circle tells you that any chord that touches that G box will work "well" in a song in the key of G, i.e. C, D and Em.
Here's a slick tool that uses the circle of 5ths to come up with nice chord progressions:
Try playing a 7th chord for the chord directly clockwise of the key your in. For example, a song in key of C, throw in a G7. It sounds good too! A song in the key of F, throw in a C7.
You can play the chords anywhere on the neck. The chord you are playing is determined by the root note: