The Capo acts as a barre. When we do a "Capo 3rd", we are barring the 3rd fret, and can therefore play a G Major Barre chord simply by fingering an E Major chord.
Normal - G Major Barre Chord Capo 3rd - G Major
The first chord is a normal G Major Barre chord. The second chord shows how a G Major Barre chord is played with a Capo on the 3rd. It looks like an E major chord, but if you listen to it, its definitely G Major.
Here is a simple capo chord chart.
The 'No Capo' column refers to the original chord. 'Capo 1' means a Capo is placed on the first fret, and so on. The chords in each column tell you what the original chord will now be, with a capo on that particular location.
For example, we saw above how the E chord played with a Capo on the 3rd fret is actually a G Major chord. If we look at E in the 'No Capo' column, and follow it to the 'Capo 3' column, we see that it is indeed a G chord.
As you have probably guessed, the capo will change a lot of the rules we have come to learn about the fretboard.