Crystalline gems made of pure or refined magic, the materia of the Final Fantasy VII world provide magical powers to their wearers—but in Cait Sith's case, they also give insight into his character.
On their own, humans and other creatures aren't able to use magic, but after equipping materia, the spiritual magic of Gaia can be used by its wielder. Materia itself is a refined product, produced from crystallised mako. It can be found in a variety of colours, each with a special power, skill or ability to provide its user with.
When Cait Sith enters the party, he's initially equipped with two peculiar materias: the Manipulate and Transform materias. These choices are symbolic to Cait Sith's character and personality, and can be thought of as foreshadowing his storyline.
Significance
"Manipulate" allows its wielder to control an enemy like a puppet-master to a puppet. The ability of this materia is a nearly blatant representation of Cait Sith's very existence: he is a puppet controlled by Reeve. Further, a connection can be drawn by looking at the definition of the materia's name. Cait Sith's mission is to manipulate AVALANCHE in Shinra's favour by leading them off-track. He also manipulates Cloud and the rest to gain their favour and allow himself to become a comfortable part of their team—despite all the while working for their enemy, the Shinra. Moreover, once exposed as a spy, Cait Sith kidnaps Barret's daughter Marlene in an effort to manipulate Cloud into letting him stay in the group.
Beyond this, Reeve could also be thought to have been manipulated by Shinra, in particular certain members of the Shinra clan. Heidegger and Scarlet have no qualms with shutting down any of Reeve's objections, while the president of Shinra himself shooed away Reeve's fears with orders of rest, thereby manipulating Reeve's will to protest. Significantly, Reeve later breaks through this manipulation by manipulating the Shinra himself: with Cait Sith at his command, he turns coat and begins to spy on Shinra without them knowing it.
"Transform" allows the user to cast mini or toad on an enemy. The word "transform" can certainly link to Cait Sith's character. In the same fashion that the transform materia disguises enemies, Reeve has transformed himself from human to something else: in this case, a toysaurus-riding robot. In terms of his personality, Reeve's (and Cait Sith's) goals and beliefs transform over the course of the game.
