Besides large-diaphragm microphones, that are generally used to record vocals in the studio, there are also small-diaphragm microphones, which are often used as overhead mics for drum kits or to record or amplify other instruments. They're great for amplifying your guitar or bass amplifier, for instance.
It's important to know the differences between dynamic and condenser microphones. Most dynamic microphones can handle a higher sound pressure (measured in SPL) than a condenser mic; a bass drum microphone, for example, will have to be a dynamic microphone. The same goes for vocals—live, that is—because the sound pressure is usually a lot higher on stage than in a studio. Also, it's important to know that condenser mics usually require phantom power (+48 Volt DC) to function.
Perhaps the most important difference between the two is that condenser microphones are extremely sensitive to high frequencies and ambient noise, which is exactly why they're preferred in a controlled, studio environment. Generally speaking, dynamic microphones are often more affordable than condenser mics.
