Question:
I need to replace my rear derailleur. What are the differences between the short/medium/long cage? Does the length of the cage matter that much?

Answer:
The easy answer is, if you have to ask, get a long cage. A long cage will work in every situation. I’m one of those “teach a guy to fish, so he quits asking me to give him fish” types, though, so let’s impart us some knowledge.

Understanding the differences in cage length means understanding both things a rear derailleur does. We all know a rear derailleur moves the chain in and out from one cog to another, but the other, equally important thing a derailleur does is move forward and back, taking up chain slack that varies as you change gears. Imagine your geared bike as a singlespeed with a bunch of gears in the back, but no rear derailleur. Suppose you had a chain that was the exact perfect length to wrap around your 32-tooth ring up front and your 34-tooth cog in the back without being too tight, or too saggy. Great. Now leave the chain on the same ring up front, but move it to the 11-tooth in the back. Saggy, isn’t it? If only there was a way have the same length chain adjust itself for smaller or larger gears. Luckily, a bunch of people in the 1800s had the same problem, and realized some sort of spring tension on the chain was the answer. The bigger the difference between the sizes of your gears, the more chain you need your derailleur to be able to take up. The ability of a rear derailleur to handle a range of chain lengths is referred to as the derailleur’s “chain wrap capacity.” You can calculate your chain wrap capacity by subtracting the number of teeth on your largest front chainring from the number of teeth on your smallest front chainring, doing the same with the gears on your rear cassette, then adding the two values. So necessary chain wrap capacity on a bike with a 44-tooth big ring, 22-tooth small ring, and 11-34-tooth cassette, would work out like this:

(44-22) + (34-11) = 45

The longer the cage of a rear derailleur, the more flappy chain it can pull tight, so the wider variance you can have between gears. Sometimes a manufacturer will tell you the chain wrap capacity of their rear derailleur, but the bottom line is you should always be sure you have enough chain to reach every gear combination—even the crossed-up ones you shouldn’t use, but might shift into accidentally. For most mountain triples, that amount of chain requires a long cage rear derailleur, and those work just fine.

So why do people try to use any shorter cages? In theory, a medium or short cage derailleur may shift just a fraction better because a shorter cage equals a stiffer cage, and they’re slightly less vulnerable to getting smote by rocks and the local flora, so experimentation is fine, provided you’re careful. In fact, most configurations will accept a medium cage rear derailleur, but only if chain length is set up carefully, and you error on the side of leaving more chain than you think you need. It also helps if you get rid of your biggest or smallest cog to lower that required chain wrap number. For most people, the added risk and configuration challenges aren’t worth the time, making the long cage the go-to option.