Traditionally electric guitars are equipped with two types of controls: A volume control adjusts the signal level, while a tone control usually controls the signal’s brightness.
Both controls use the same, basic electronic component – the potentiometer (or pot), an adjustable resistor with three contacts.
A horseshoe-shaped track of electrically resistant material (often graphite) runs between the pot’s two outer contacts. The middle contact is wired to a wiper which runs on top of this resistant track, and which is mechanically connected to the pot’s shaft.
In a volume control the incoming signal is usually connected to one of the outer contacts, while the other end of the resistant track is connected to earth (=ground).
Because a current will always choose the path of least resistance, the closer the wiper is to the track’s input side the louder the signal will be. The closer the wiper gets to the other end of the track the more signal will go to ground, as the resistance between the wiper and the earthed contact is becoming more and more negligible. Sending audio to ground basically means junking it.
In a tone control a capacitor is used as an audio filter (generally) in front of the pot to skim off the treble (=top end) of the signal. Only the treble content is then fed through the pot, with the wiper’s position determining the amount of top end that is ”flushed down the drain” by being sent to earth.
In many Gibsons (like the Les Paul or the SG) the signal is first fed through the filtering capacitor before it arrives at the control pot’s contact.
Most other guitars (for example Fender models) have the capacitor connected between the pot’s output and earth (ground).