Okay, let's start this with some interesting history as a prelude to the whole mic discussion. "Why" will become pretty clear by the third or fourth paragraph:
In a way, the history of microphones and sound all started with Alexander Graham Bell, and Western Union. After Bell won the lawsuit with Western Union over the invention of the telephone, his fledgling AT&T company needed somebody to manufacture phones for them. Western Union had created a manufacturing division (Western Electric) to make telegraph keys and telegraph equipment. Bell bought the Western Electric division and they had the exclusive right to manufacture phones for Bell.
By 1910, Western Electric had the ambitious task of creating a coast to coast telephone hookup to tie in with the opening of the Panama Canal, but the problem of amplifying a signal over long distances was still unsolved. In 1913, Dr. Harold Arnold (of Western Electric's research group) saw that Dr. Lee DeForest's "Audion vacuum tube" was the possible solution, and they bought the rights to it and began work on a "high vacuum" tube.
This indeed solved their long distance problem, and led to another discovery - a "loud-speaking telephone". In 1916, they received a patent for what we now call a "loudspeaker". With the addition of the "high vacuum" amplifying tube, and another little patent for a device called a "condenser mic", they were suddenly in the P.A. business as well.
These inventions opened the door for radio, talking movies, and sound systems in general, and with their other patent for a high quality "amplifier" in 1916, they pretty much defined the science of sound. (It would be another 12 years (1928) untill a young Georg Neumann would start his own mic company in Germany. That same year, Western Electric received a patent for a "dynamic mic" design.
The designs Western Electric developed for movie speakers would eventually start companies like Altec and JBL making horns and loudspeakers for Western Electric, and eventually those Western Electric designs became the foundation for their own speaker lines.
Western Electric created their own Research and Development arm called "Bell Laboratories", which went on to create the transistor and a host of audio related products. It was Western Electric and Bell Laboratories who we must thank for the development and research into microphone design that we enjoy today.
Next, we'll look at some of the different types of microphone designs in terms of advantages and disadvantages. How a "dynamic" mic really works will definitely surprise you (hint: it's NOT just a small speaker in reverse).