The Caesar Cipher is a very simple way to encrypt text messages (that is, messages that contain only the 26 letters of the alphabet). It is so called because Julius Caesar is belived to have used it.
It isn't a very effective method, it can be broken quite trivially in a few minutes, even without a computer.
The Caesar Cipher is a simple substitution cipher.
To encode a letter, find it on the red outer circle. Look up the equivalent coded letter in the blue inner circle. For example, to code the letter A we use letter X. To code letter F we use C, etc.
THIS IS A SECRET MESSAGE
QEFP FP X PBZOBQ JBPPXDB
To decrypt a message, we reverse the process. Simply find the encrypted character on the inner blue ring, and substitute the correct plaintext value from the oute red ring. So to decode A we use D, to decode F we use I etc.
Rather than shifting the letters by 3, you can shift them by n where n is nay number between 1 and 25. If you shift the alphabet by 26 letters, of course, you end up with the original alphabet, so the message won't be encrypted at all.
In that case, n becomes the "key" you need to know in order to encrypt or decrypt messages. However, changing the key doesn't really make the code any more secure. There are only 25 possibilities and it is quite quick to try them all on the first few letters of the text. The correctly key will yield a sensible message, all the other keys will give a random set of letters.