The Caledon district is primarily an agricultural region. Most agricultural activities involve grain production with a certain amount of stock farming. The town is locally well known for the Caledon Spa and Casino and for its rolling hills and yellow canola fields in spring.
The town has a Mediterranean climate of warm, dry summers and cool, wet winters. Temperatures are modified by its close proximity to the South Atlantic Ocean, just over the Klein River Mountains to the south.
The place was originally known in Dutch as Bad agter de Berg (Bath Behind the Mountain). A bath house was built in 1797 and a village called Swartberg sprang up, which was later renamed Caledon in honor of the Irish peer Du Pre Alexander, 2nd Earl of Caledon (1777–1839), the first British governor of the Cape (1806-11).
The Caledon wild flower garden is world-renowned and forms part of a reserve at the entrance to VensterKloof. The Caledon garden has an annual show during September at the time of year that best displays the abundant array of indigenous wild flowers that bloom in this season.