Tone
This page focuses on core tone, particularly distortion tone. Effects placement and impact are discussed individually on their own page, for each kind of effect. While effects are referenced below, they are only considered for how they affect core tone when they are set to be as transparent as possible.
The complete signal chain for a typical rig is
Live/Recording Hands > Guitar > Pickups > Guitar Electronics > Stomps > Pre-Amp > Effects > Power Amp > Cabinet/Speakers > Microphones > Microphone Pre-Amps > PA/DAW
Jamming/Practice Hands > Guitar > Pickups > Guitar Electronics > Stomps > Pre-Amp > Effects > Power Amp > Cabinet/Speakers
Every stage has a significant impact on the tone, and each stage is joined by cables which can also influence the tone.
Contents
Hands
This relates to your technique - the quality of your fretting, your picking, and/or other techniques (such as legato or slapping). Garbage in = garbage out. No matter how much top-of-the-line gear you buy, you can't buy good technique. Even the best players can sound good through mediocre gear, but a poor player will not sound good through anything. Practice, practice, practice!
Guitar
This refers to both the quality of the instrument and its setup. Good technique means nothing if your guitar is fretting out. On the other hand if your guitar is set with very high action, it will be impossible to play with speed and good technique. And even with good setup and technique, if the guitar is simply a poor build, with resonating parts and bad joints, it will appear in your tone.
Pickups
Pickups are often an instrumental part of the tone, so be sure to choose good ones for your guitar. There's no universal answer for what to get - the ideal choice depends on your guitar's tone (generally indicated from the mass and type of wood its made from), your desired tone, and your playing style. Guitar manufacturers often outfit low to midrange guitars with crummy, in-house pickups. But even a somewhat high-end guitar might have poor stock pickups. Aside from being deficient in certain frequencies, poor pickups generally have a very poor signal-to-noise ratio. Its usually the first thing I look to replace in a guitar, as it has a very large impact on tone.
Guitar Electronics
Most people don't pay a lot of attention to this part of the signal chain, but it can have a large bearing on tone. First, let's get the bad stuff out the way. Bad solder joints will lead to a crackly signal. Dusty potentiometers will sound noisy/crackly when turning them. Improper shielding will allow hum and other interference to get picked up and infect your signal. A good electronics cavity sounds quite a bit better than a poor one.
But there are also tonal considerations for the resistance of your potentiometers and capacitance of your tone circuit. Usual values for pots when using passive pickups are 250K, 500K, and 1M. The higher the resistance, the brighter the signal will be. Lower values allow higher frequencies to "escape" to ground. The capactitance value of the capacitor used for your tone knob will determine the range of how much high-end attenuation occurs. Smaller values will be barely noticeable, only slightly dimming the highs; while high values will result in a very dark tone. The most common value is .047μf, or 47nf.
Be very careful when switching from active to passive pickups or vice versa. Actives usually have much different ideal values for pot resistance and capacitor values. Trying to swap just the pickups but keeping the electronics is a recipe for disaster. If you plan to reuse anything, be sure to read its values carefully. Don't confuse a 25K pot for a 250K pot. Don't confuse a .22mf cap for a .022μf cap. The results can cause very odd things to happen. When changing pickups, it's often a good idea to first wire them up connecting one at a time directly to the output jack to get a good idea of what they should sound like.
Stomps
Stomps is a bit misleading - I'm talking about anything that can be placed between the guitar and the pre-amp. Usually these are stomp boxes, but can also be wah or volume pedals, floorboard processors, rackmount devices, etc.
True vs. Buffered Bypass
There's a lot of debate as to which is better - true or buffered bypass. True bypass means the signal coming from the guitar is passed directly into the output of the stomp device when the device is set to bypass mode (essentially means it is off). Buffered bypass means the signal is received by the device and run through a transformer or low power amplifier in the device, even when it is in bypass mode. True bypass should basically be invisible, as though it was physically removed from the signal chain, while buffered bypass will have some impact on the signal.
Now, which is better? Well, that depends. Passive pickups output a high impedance signal, at least on peaks. Trying to send that load through a lengthy instrument cable will lead to attenuation of high frequency components. In other words, it will dull the tone of your guitar signal compared to a shorter cable. This can be avoided by using a most buffered bypass pedals, which will output a low impedance signal which will retain its frequency response through a longer stretch of cable.
Not all buffered bypass pedals are the same, however. A poorly designed bypass (or a pedal with a weak battery) may sound like its doing awful things to the signal, adding noise or altering the frequency response. When buying pedals, you should not only check whether the device is true or buffered bypass, but also read reviews on its transparency if it is a buffered bypass. Also, some devices are designed to receive the guitar's high impedance signal as part of how they work. Some wah pedals and many fuzzboxes are intentionally low impedance, creating an odd kind of distortion when fed a high impedance signal. Placing a buffered bypass pedal in front of such devices will prevent them from doing so. This may simply be a matter of arranging your devices in a certain order vs. using alternate devices.
Amplifiers are typically high impedance devices, capable of accepting both high and low impedance signals without any change in tone - they don't care if you are using buffered or true bypass. If you notice a difference in tone when running through your pedal in bypass mode vs. plugging directly into the amp, the change is likely due to your cables or the design of the bypass circuit (or a weak battery in a buffered bypass pedal).
Boosts and Frequency Response
Many pedals are designed as boosts for your amp. They increase the volume of your guitar signal before the amp, forcing the amp into distortion. Most of the time, distortion pedals are used as boosts, by turning the drive/gain all the way down and the output/volume all the way up. A lot of hype surrounds certain boosts, believing the circuit is doing some kind of voodoo that can't be explained in simpler terms or matched by other devices. Its true that analog circuits can get quite complex; however, it does not mean they are beyond comprehension.
I think the most obvious thing about any boost pedal is its effect on the signal's frequency response. It's no secret that the frequency response of the signal fed into a distortion stage heavily influences the nature of the distorted tone that results; it helps explain why certain types of pickups are favored for certain tones. Some of the most revered boost pedals, such as the Ibanez Tube Screamer, use a high-pass filter to reduce the amount of bass in the signal. This tends to tighten or focus the distortion. Most also have a tone knob, which acts like the frequency control of a parametric EQ that is set to boost - again, this offers more manipulation of the signal's frequency response, altering how the amp distorts.
Now, that's an overly simple explanation. While some boosts may be simple parametric EQ's or high-pass filters, most are often more complex. The tone knob may control multiple parts of a circuit, adjusting multiple filters and multiple values on each filter simultaneously. It may use positive or negative feedback, which not only influences frequency response but also alters the signal over time. And there may be some compression or distortion involved, which may affect some frequencies more than others.
But the point to recognize is that the guitar and pickups will already influence frequency response. So will a boost more than likely. When dialing in your gear, all this must be taken into account. A boost and amp combination that sounds great on one guitar might sound so so on another. Maybe a slight tweak to the boost will get it back on track. Maybe you need to use a different boost. Or maybe you use the same boost but then use an EQ to adjust the signal a bit further before it hits the amp.
I always like to start with using an EQ alone as a boost - it is more transparent and offers more control than most boost pedals. Then you can find where the sweet spots are for your guitar and amp. If you also like the tone of some boost that isn't strictly related to frequency response, try to use it with as neutral settings as possible and use EQ to refine the resulting distortion. Then try it with neutral EQ and use the boost's tone to find the sweet spot. The best settings are probably somewhere in the middle of these two, using both the boost's tone and some EQ refinements.