In a nutshell, a “pickup” is a device that detects the vibrations (or resonance) produced by a musical instrument and converts those vibrations into electrical signals that can be sent to an amplifier, mixer board, PA system or recording device.
Basic pickup technology has not changed much in the past few decades (although there have been many refinements), and most of the pickups available today share common features and functionality. For this discussion, we will divide these pickups into the following general categories:
- Piezo Pickups – used to convert soundboard or bridge vibrations
- Magnetic Pickups – used to convert string vibrations
- Microphones – used to convert air vibrations
Note that all of these pickups perform the same basic function – that is, to convert vibrations into electrical signals. The technical term for this conversion process is transduction, which is why pickups are also known as transducers.
It is the goal of all pickups to accurately produce the sound of an instrument. So you can say that the quality of the pickup is directly related to the accuracy of the transduction process – that is, the accuracy of the conversion of the resonance of a given instrument into electrical signals.
Piezo Pickups
The most common type of pickup is a contact sensor that is attached directly to an instrument. These pickups are often made from piezo-electric (pressure-sensitive) crystals which is why these are sometimes referred to as piezo pickups or piezo transducers.
Piezo pickups are commonly available as surface-mount sensors
but can also include undersaddle pickups and pickups that are placed between
surfaces, such as between the foot of a bridge and the soundboard, or that are inserted
into the wing slot of a bridge.
Note that the word piezo (pronounced pee-ay-zo or sometimes pie-zo) is Greek for press or squeeze, which is descriptive of how a piezo sensor works. A piezo crystal that is placed under pressure or forcibly deformed (bent, touched, twisted, etc.) emits an electrical charge (or signal), so it has the inherent ability to convert vibrations into electrical signals.
Of course the piezo crystals used for musical instrument pickups are highly sensitive and will emit a signal even at the slightest touch or vibration. The crystals used for musical instrument pickups are commonly made of natural crystals such as quartz or tourmaline, but can also be manufactured from other materials.
The accuracy of the conversion from vibrations to electrical signals (transduction) determines the quality of the sound produced. In other words, if the original musical vibration is converted with a high degree of accuracy, it will sound very similar to the sound produced by the original vibration. So it stands to reason that in general a more expensive, high quality sensor will produce a more accurate sound than a low cost, low quality sensor.
Other factors that affect the accuracy of the sound of a piezo pickup include the density and type of the material that the pickup is attached to, the pickup’s location on the instrument, and how far the pickup is from the source of the resonance (strings, for example).
Different instruments (and even different parts of the same instrument) will require different types and/or sizes of sensors. A piezo sensor that works well for converting sounds on an acoustic guitar may not work well on an upright bass due to the increased resonance and lower frequency range. A pickup manufacturer may test hundreds of types and sizes of pickup sensors to determine which one gives the best overall response for a particular instrument.
Magnetic Pickups
It is important to note that piezo sensors require a certain level of resonance to operate efficiently. The less vibration available, the lower the resulting output of electrical signals. Because of this, piezo pickups tend to work best on instruments that have some sort of a resonating chamber, such as acoustic guitars, mandolins, violins, etc. There is a point at which there may be so little vibration that the piezo transducer does not generate a usable signal, such as on a solid body electric guitar. This is where magnetic pickups can be more useful.
Unlike piezo sensors, magnetic pickups do not use crystals
at all. A magnetic pickup 
works by creating a small magnetic field which is
then disrupted by the vibrations of a steel string. Essentially a magnetic
pickup is a magnet surrounded by a coil of wire. When the steel string vibrates
within the magnetic field, a small amount of current is generated in the coil
of wire, which is then transmitted to your amp or mixer board as an electrical
signal. Note that since the string must contain metal to interact with the
magnetic field, this type of pickup will not work with nylon strings or strings
made of other non-magnetic materials.
With magnetic pickups, there are many factors that affect the accuracy of conversion of the string vibrations to electrical signals, including the magnetic field strength and size, coil wire type and gauge, number of windings in the coil, steel content within the string, and so on.
Microphones
A microphone is another commonly used transducer that converts air vibrations into electrical signals without requiring direct contact with the instrument. Because the source of the sound is the vibrations of the air after they are emitted from the instrument, it would seem that this would produce the most accurate sound reproduction possible. This is true to a certain degree, but the sound quality can also be affected by the type, construction and quality of the microphone itself, as well as its mounting location relative to the sound source.
For stage use, since a mic converts vibrations directly from
the air it may also pick up the vibrations of other sound sources nearby – such
as the drums or the bass player. This can muddy the sound and lead to feedback
issues that can be difficult to resolve. For this reason, mics are often sold
as part of a pickup system that also includes a piezo or magnetic pickup. Mics
are preferred when recording, where accuracy is very important and you have
more control over the performance environment.
Note that most instrument microphones are condenser mics, which will require a power source to operate correctly. This power can be supplied by an onboard preamp driven by a 9 volt battery, or from an external power unit that sends power through the cable.