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I'll write out a G major scale for this example.
G A B C D E F# G I ii iii IV V vi vii0 I
The little " 0 " next to the seven indicates that the seventh chord of the scale is diminished. I'll get to just what that means in a moment.
We are using upper and lower case Roman numerals to distinguish between major and minor chords in the scale.
The lower case numerals indicate minor chord forms. In the key of G these chords are Am, Bm, and Em. The seventh chord isn't major or minor. It's a diminished chord.
The upper case numerals indicate major chords. In the key of G our three major chords are G, C and D. This is actually the "one-four-five" progression referred to when people use the Nashville number system. For the most part folk songs will revolve around the three major chords of the scale.
The I chord is the root chord for the scale. This is usually, but not always, the chord a song begins and ends on.
The ii, iii and vi chords are marked as minor here but they can and sometimes are played as major chords. A iii chord played as a major is sometimes called an "off chord" at jam sessions.
The vii 0 is the weird one. Because of it's place in the major scale it is theoretically supposed to be a diminished chord, but in folk music you'll often run into the vii 0 being played as a major chord. Go back and look at the chord progression for "Little Maggie" and you will see that we are playing an F major chord. Not F# or F#dim, but F major.
As we just discussed with the ii, iii and vii 0 chords, this is not cast in stone. You can theoretically use every chord in the chromatic scale in a song, but nine times out of ten the chords are going to stick to the framework we've just outlined in the major scale.
The reason this basic structure is helpful is that you can use it as a mental reference when you have to work out a song on the fly. If you know the song is in G then the odds are pretty good that the G, C and D chords will be the used in some fashion. If the song suddenly takes a weird turn then it might be the iii chord being played as a major. In the key of G that would be a B chord.