Audio Recording & Music Mixing Software
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Here is an example of a recording setup using a usb interface along with powered studio monitors.  The ? on the diagram is to signify another instrument of some sort, either audio or MIDI, plugged in and available to the user.  This, of course, depends upon the instrument itself and the interface and software used.

The guitar shown can be run through an amplifier with effects, then to the interface.  Or, the guitar could be plugged directly into the interface, or through effects pedals that would be plugged into the interface.

The guitar could also be played through the amplifier, but instead of connecting the amp to the interface, a microphone could be placed in front of the amp's speaker and run to the interface.

As you may now imagine, there are numerous methods for transporting signals to a computer for recording and processing.
The diagram to the right is essentially the same as the one above, except the studio monitors are unpowered.  This requires the use of a low distrortion power amplifier suitable for studio recording.