Gauge, commonly abbreviated as "GG", is one of the most important terms when talking about knitted garments. Gauge is a unit, measuring the number of needles in one inch width of the machine needle bed.
Basically, The higher the gauge number, the tighter the knit and the more cashmere yarn that is being used. you can say that a higher gauge indicates a thinner sweater. Typical range of gauge on flatbed knitting machines is from 3GG to 14GG. For example, with 12-gauge there are 12 stitches or rows of yarn in one inch of knitted cashmere, so the cashmere is relatively dense. With 7-gauge there are 7 stitches or rows per inch, so the cashmere has a more open or mesh like look and is more light-weight than the 12 gauge if the same yarn is used. At 3GG, there are three needle hooks per inch on the needle bed, thus creating a more coarse look sweater. And at 14GG, there are 14 needle hooks per inch on the needle bed, creating a finer looking sweater. So gauge is one of the main components that defines the thickness and look of a sweater.
Therefore, 3GG machines is more often used in the winter time to knit chunkier sweaters and 12GG is used year round to knit cover up cardigans that can be worn in all seasons. Anything higher than 16GG creates a style that would feel more like a knit product (such as Tee's) rather than sweaters to the consumer.
To determine what gauge of machine to use, below chart is handy. Although keep in mind, multiple plies of yarns can be twisted together to knit so that finer count yarns can be used on lower gauge machines as well.