He also follows the Circle in his "Learning Notes On The Guitar" lesson. It's just a way to make sure you hit every key/note without just going up in half-steps.
In CAGED you start with playing a C chord in the 5 shapes, then a G chord, D chord, etc. going around the circle as shown on page 9 in CAGED Unleashed.
C G D A E B F# C# Ab Eb Bb F C
The "easiest" way to think about the circle is:
If you start with a C Major scale, the 5th note is G, i.e. up a 5th.
Then in a G Major scale, the 5th note is D.
In D, the 5th note is A.
etc, etc. around the circle.
If you go the other way:
The 4th note in C Major is F, i.e. up a 4th.
The 4th note of F Major is Bb.
etc, etc, around the circle in "reverse".
To the right (clockwise) is always up a 5th, all the way from Cb around the circle to C#.
Going to the left is always going up a 4th, in the reverse order all the way from C# back to Cb.
What gets a bit confusing is that going up a 5th gets you the same letter name or key as going down a 4th and vice versa.