As far as guitar electronics go... you must first understand electronics. You need to develope a basic understanding of how it works (current, voltage, resistance, grounding, etc...). Once you get an understanding of all the basics you can apply it to guitar electronics. The best book I can recommend is available on stew-mac.com. Any book on there should be able to help you out. To halfway explain your question though... pots (potentiometers) are the knobs... they increase and decrease the amount of current that flows through them. Depending on whether you wire it as a volume pot or a tone pot pots can do different things. Tone pots bleed of different frequencies to alter the sound of the guitar. To get higher frequencies you use less resistance... leaving the guitar with a treble type sound... for bass tones you bleed as more treble by resisting the current... this is how you get warm tones. Capacitors are what bleeds off treble in guitar set-ups... different value of capacitors bleed off more or less treble. A volume pot simply restricts the entire current of the guitar without altering the tone. The grounding is done to complete the circuit. If you didn't ground the guitar it would shock you or anything that touched it (electricity is always trying to find the shortest path to the ground). That's why you provide the guitar with this path by grounding it to itself. This keeps the current from flowing through your body. If you get more in depth with electronics you will learn about passive and active pickup systems... series/parallel wiring... and in-phase and out-of-phase wiring... also some other custom wiring tricks that you can do with switches and knobs. Good luck, and check out a book it will help you out alot