Bags has several meanings:
When calling bags, one will not usually include the word "on" - "Bags ____ing" is used in the case of verbs, and "Bags the ____" in the case of nouns. I bags the front passenger seat
Bags is of particular use in opting out of an undesirable task, when saying "Bags not me" before anyone else in the group will exclude one from having to do that task. Young children often use bags in this way in the song "Turn around, touch the ground, bags not me!".
"Bags" is derived from the Latin "Pax" ( Peace ), formerly in common usage in schoolyard games.