The transformer is made up of many winding of insulated wire called coils. These coils are insulated from each other by a thin coating of varnish. If they were not insulated they would be just a large wire with no work purpose. The insulation helps to create a very long conducting wire. Electricity that enters your home is known as AC or alternating current. This current goes from 0 to 120 volts, 60 times a second or 60 hertz.
A transformer can only operate with AC as the electricity must wave or alternate for the windings to do their job. There are two sets of winding in most common transformers. There is a high side or high voltage connection and a low side or low voltage connection. These windings are electrically insulated from each other, they do not have a conduction path. It is the AC, or alternating current, that "induces" a current into the other winding.
Let's take the transformer on the pole outside your home. All transformers have a ratio--the number of windings the high and low sides have. Let's say that the voltage on the high side of the power pole is 12,000 volts and the power coming from the pole transformer into your home is 120 volts. The ratio of the step down transformer would 100 to 1. In other words for every 100 windings on the high side there is only one winding on the low side.
Every transformer for the most part can be used as a step-up or step-down transformer. That is why when the power goes out most electrical utilities want you to have a disconnect switch in place if you use a generator. That generator may be giving you 120 volts but if plugged into the pole transformer it can generate 12,000 volts on the high side and injure a utility worker.
Article by G.K. Bayne.