So basically there are two different ways to wire a residential PV system. You can either have one inverter (macroinverter system), which typically resides in the basement of your home next to your service panel. Or you can have many inverters (microinverter system), on the same sized system, with the same number of panels. It's just a different approach.
Picture the system in the graphic above. These are two identical systems with the same STC rating (16 panels, let's call 'em Solarian 250's), meaning that the system is a 4kw, effectively.
The Macroinverter system [A] is a single inverter. If any panel or the inverter itself fails, the single device will register a fault code or if something becomes unplugged up there on the roof, you'll lose the string. The system is also wired as such that the DC power from the panels continues through the house to the inverter. That requires EMT conduit if the wires are indoors, per NEC 690.
The Microinverter system [B] are many inverters. They're not in the basement, they're on your roof underneath the array. Each panel has its own inverter. They're probably just as pricey in number as it were to just get one single unit.
Pro's and Con's
Salespeople were pushing the microinverter systems hard when they first became popular, back in 2010. I was a bit skeptical of their popularity. Not just because I was an old dog who only wanted to install systems a certain way. Admittedly I had more experience with what I'm describing as "macroinverter" systems, a name they were never given, but makes sense to describe them as, since microinverters have their own definitive terminological distinction.
Here's why I was skeptical.
Microinverters are more subject to fail, if not solely for the reason that they're contantly exposed to the elements. Temperature cycles are known to damage electronic equipment, and daytime/nighttime temperature differentials, during certain times of the year, can exceed 30 degrees a cycle. Also, inverters are more efficient in cool, dry places. It just seems to make more sense to install a single-inverter system, where it can be installed in the basement next to the service panel.
Aside from their exposure to the elements, multiple inverters also multiply the chance for system failure. Without an advanced monitoring system (which could also potentially be subject to fail), there's no way to know if a single inverter gets "knocked out," or loses its ability to produce power. Meaning that you'd have no idea knowing just how many of your panels are actually producing power. The panels, remember, aren't wired in series. They're each wired individually.
Fill out a MicroInverter Question Sheet and a Wiring Diagram.