CAGED System

Most chords (more specifically, the C, A, G, E and D chords) you play can be played in multiple positions across the neck.

This is really important for fingerstyle guitar because if you're playing a melody that stretches outside the confines of the chord that you're playing as part of your harmony, you need to consider being able to shift that same chord to a different location so as to play the melody simultaneously with the bassline and the harmony. For Example:

The CAGED System helps in arranging songs and composing, too. Here are a list of chords that you can transpose and play all over the neck, in the same shape: