The circle of fifths is an invaluable tool that reveals important relationships between pitches and organizes them in a way that’s very useful to understanding diatonic harmony.
Chords within a given key have a function, or role they play within the key. Understanding these chord functions can help you understand why some chord progressions sound good while others sound not so good.
One of the more challenging obstacles as a beginner guitarist, or if you’re just new to guitar theory, is figuring out how to determine the key of a song. Some songs stick to standard chords within a key, which makes this task much easier. Other songs, however, are not as straight forward.