There are two main types of connections used in a studio to carry audio signals. These connections are balanced and unbalanced. When possible it is always better to use a balanced connection.

Unbalanced connections:
Unbalanced connections consist of two contact points, one is considered hot, the other ground (0V). Unbalanced connections transmit the signal (the desired information) across the hot wire, and the information is interpreted with respect to ground (0V). The issue with unbalanced connection is that they are more susceptible to electro-magnetic noise than balanced connections. The best way to explain why, is to explain how a balance connection works.

Balanced connections:
Balanced connections typically (there are a few exceptions) consist of three contact points. One is considered hot, another cold, and the final one a common ground. Unlike the unbalanced connection the hot and cold connections both carry a signal and it is the difference between these two signals that carries the desired information. In this way both the hot and cold connections are exposed to generally the same electro-mechanical noise. Therefore when this difference between the hot and cold signals is extracted the noise on both lines will phase cancel yielding only the desired signal information.

*Note: Using a balanced cable alone does not create a balanced connection, both pieces of gear and the cable must support a balanced connection to create a balanced connection. (Example: Using a balanced cable to plug an electric guitar into and amp will work, but not create a balanced connection because the guitar and amp will most likely not support a balanced connection.)