[Marganus and Cunedagius] assembled their armies and rose in rebellion against the Queen [Cordelia]. They refused to stop their outrages; and in the end they laid waste to a number of provinces and met the Queen herself in a series of pitched battles. In the end she herself was captured and put in prison. There she grieved more and more over the loss of her kingdom and eventually she killed herself. As a result the two young men seized the island. That region which extends beyond the Humber in the direction of Caithness submitted to the rule of Marganus; the other part which stretches towards the setting sun south of the river was put under Cunedagius.[II.15]

After they defeat Cordelia, her nephews carve up her territory, and the region around CAITHNESS becomes subject to Marganus. The area is a boundary region, featuring in Geoffrey's accounts of pre-Roman British history:

[Belinus and Brennius] decided that Brennius..., who was the younger, should be subject to his brother but should rule Northumbria from the Humber as far north as Caithness. [III.1]

[Belinus] summoned workmen from all over the island and ordered them to construct a road of stones and mortar which should bisect the island longitudinally from the Cornish sea to the shore of Caithness and should lead in a straight line to each of the cities on the route. [III.5]

Tatlock notes that this road is pure invention, derived from Henry of Huntingdon (p. 10), and suggests that the reason so remote an area appears at all might be that the bishopric of Caithness had just been founded, around 1128-30 (p. 11). Like ORKNEY, the area was associated with Scandinavians: Tatlock notes that it was mostly held by the Norse jarls of Orkney.

Caithness then appears as a homeland for the Picts:

Marius, the son of Arvirargus, succeeded him the kingship. He was a man of great prudence and wisdom. A little later on in his reign a certain King of the Picts called Sodric came from Scythia with a large fleet and landed in the northern part of Britain which is called Albany. He began to ravage Marius's lands. Marius thereupon collected his men together and marched to meet Sodric. He fought a number of battles against him and finally won a great victory. In token of his triumph Marius set up a stone in the district, which was afterwards called Westmorland after him. The inscription carved on it records his memory down to this very day. Once Sodric was killed and the people who had come with him were beaten, Marius gave them the part of Albany called Caithness to live in. The land had been desert and untilled for many a long day, for no one lived there. Since they had no wives, the Picts asked the Britons for their daughters and kinswomen; but the Britons refused to marry off their womenfolk to such manner of men. Having suffered this rebuff, the Picts crossed over to Ireland and married women from that country. [IV.17]

The story of the Picts settling a desert area may be compared to that of the Basclenses who pass through ORKNEY on their way finally to Ireland. Tatlock suggests that Geoffrey got the idea for the triumphal stone in WESTMORLAND from William of Malmesbury's description, in the Gesta Pontificum (1125), of a vaulted hall in CARLISLE with the inscription "Marii Victoriae." He also points out that the general name Westmoringaland appears as early as 966 in the Anglo-Saxon Chronicle, and notes that there would of course have been many inscribed Roman stones in the general area (p. 20). Today, the Senhouse Roman Museum at Maryport displays a large collection of Roman altars and stones from the area.

The region puts in one last appearance at the opening of the Arthuriad:

... as soon as the Saxons heard of the death of King Uther, they invited their own countrymen over from Germany, appointed Colgrin as their leader and began to do their utmost to exterminate the Britons. They had already over-run all that section of the island which stretches from the River Humber to the sea named Caithness. [IX.1]

The rather busy Caithness Community Website includes many sections on the history and archaeology of the area: you just need to dig a little.