thanks bobby king, that was prob the least complicated description yet, lets take a simple song, good ol sweet home alabama, the chord progression is D, C, G... you start on D which is the fifth degree of the Gmajor scale, so your playin in the key of Gmajor correct?
You know, "Sweet Home Alabama" is a little tricky as far as what key it's in. I'm more inclined to say that it's in D, and the chord progression is (in Nashville numbers) : 1 b7 4 4
You could describe it as: 5 4 1 1 in G, but I don't think it is. The melody of the song is centered around a D and it's like a pentatonic scale melody.
It's the b7 chord (flat 7 major triad) that causes the confusion. Take a similar song, "Can't You See". In that case the progression is:
1 b7 4 1. (D C G D)
Same thing only it goes back to 1. But you probably wouldn't think "Can't you See" was in G, you'd think D. In both cases, there is never any 5 chord, the "dominant" which most strongly establishes the key. That leaves it a little ambiguous, harmonically speaking.
Major chords built on scale degrees like b7, b3 and b6 are common in rock and blues tunes. It's almost like a harmony system built on a blues scale.
I once had a discussion with a music teacher about that b7 chord. I called it the "4 of 4", but he said that it was more like a substitute for a 1 dominant seventh chord (1
7). In traditional harmony, that chord would signal a modulation to 4. So, that way of looking at "Sweet Home Alabama" would be like this: 1 1
7 4 4. It's as if it starts in D, then makes a temporary modulation to G. But I'm more inclined to think of it as being in D, but using that "blues scale harmony" (I'd be interested in any of you music instructors weighing in on this)
This stuff can get a little complicated, and sometimes you have to look at several factors to determine the key of a song.
** I thought of another good example to discuss the b7 chord -- "Hey Jude". So, the majority of the song is regular C major, plenty of 5 dominant chords, sort of a temporary modulation to F in the bridge that goes gracefully back to C, nothing unusual. But then at the end refrain we have that same progression: 1 b7 4 1. So how do you explain the Bb major triad in the key of C? Same thing I suppose, either it's a substitute for a 1 dominant seven (creating a temporary modulation to 4) or it belongs to that realm of blues/rock harmony where a b7 major triad is "kosher"

without considering it outside of the key.