Dynamic mics are relatively inexpensive, durable utility mics that can be good for recording almost anything depending on the following:
With dynamic mics hHigh frequencies aren't as clear and the low end is often limited so they are not always great for instruments with a lot of highs or lows that you want to use in your mix.
Workhorse Dynamic Mics
Condenser mics are good for recording a wide range of instruments and sounds. Two can be paired to get some remarkable stereo recordings (drums, ambient sounds, etc.) but a single large diaphragm condenser mic is excellent for recording vocals and acoustic instruments.
These are technically condenser mics but are also commonly used as pickups on acoustic guitars and other instruments. You typically mount a PZM mic on a flat surface such as a wall or someone's chest. Put one of these on 2 or more walls to get a great recording of the room sound. Excellent for audience sounds, etc..At only ~$120 a pair, the Sound Grabber II from Crown is a good starter PZM.
Ribbon mics are generally a lot more expensive than dynamics and condensers but have a smoothness of sound that the others can touch. Though they have improved over the years, Ribbons are more fragile and expensive so they are not always a good choice for remote live recordings.
When recording vocals you need to remember that the balance of the sound changes as the mic gets closer to the mouth. Sometimes this is used as a special effect but most of the time you want to keep the mic 6 or more inches away from the mouth. The proximity effect that results in close miking can make it difficult to place the vocal track in the mix so it's best to keep your distance. The further you are from the mic however, the more of "room sound" you'll get on your recording. Sometimes this is a good thing if you have a reverb-y space you are recording in and want to capture, or if the room has a lot of damping and is very quiet. You also tend to pick up more sound of heaters, computer fans, street noise, etc. when you move away from the mic so it's best to run some tests to find the best distance to record a given vocal part.
You'll typically get a boomy sound if you put a mic directly in front of the sound hole so it's best to mic above or below the sound hole pointing up/down. If you want more fret noise move the mic closer to the neck otherwise point the mic at where the pick and/or fingers are touching the strings. You'll also want to use a condenser mic for acoustics. Large diaphragm condensers will usually get you a nice warm sound.
If the acoustic guitar is predominant in the mix, you might want to run some tests at different mic positions to find an appropriate sound for a given song.
Unbalanced mics send their signal using only 2 wires: a ground and a signal wire. Balanced mics send their signal using three wires: a ground, a signal and a - signal. The and - signals are the same signal but flipped: when the signal is high, the - signal is low. They are a mirror of each other. The preamp in the mixing board or audio interface uses the difference between the two signals to create the final signal.
Mics pick up noise from other devices in the area (lights, motors, amps, etc..) which actually add signal to the wire. Extra voltage is actually getting added to the wire from the devices around it. The wire itself is like a microphone but for electrical noise instead of sound which, of course, is a bad thing.
Balanced mics are much quieter because the final signal is pulled from the difference of the two signal wires. When electrical noise is absorbed by a balanced cable (two signal wires), wires get the same voltage so it doesn't show up in the final output.
Many condenser mics, direct boxes and other devices you might plug into a balanced XLR cable contain tiny live circuit boards that require power to operate. For mics, these circuits are preamps that take the tiny signal generated by the mic element and turn it into a bigger signal that can be sent over a wire without picking up noise. These preamps will often contain balanced outputs that allow the signal to be sent over long wires without picking up noise. Normally, you'd need a battery or power supply (wall wart) to power this "active circuit" but Phantom Power uses the balanced mic wires to provide power back to the mic while at the same time send signal to the mixer or audio interface. It's actually a neat trick sending power in one direction and getting signal in the other over the same wire.
Phantom Power is built into all but the cheapest mixing boards and audio interfaces but is an important feature so make sure it's present on any piece of gear you expect to plug a professional mic into. The lack of Phantom Power is often a tip off that the gear is junk.
Wireless mics are invaluable in situations where a cable just isn't an option or will be a major pain in the ass. Some performers use mic cables as a prop (Roger Daltry - The Who) but most would prefer they were not there. This extra convenience comes at a price: both a financial one and an audible one. Wireless mics are always more expensive and require batteries. Bad and worse. Batteries can run out at the worst possible time of your event so you risk missing a great performance. Perhaps a bigger problem, however, is the degradation of the sound which must be transmitted (modulated) then received (demodulated) adding distortion and reducing the dynamic range (noise).