How electricity is generated?

(Image: Generation of Electricity)

If you take a Magnet and move it relative to a Conductor, a current is made to flow in that conductor. The magnitude of that Current is dependent on many things, including the Magnetic Flux density cutting the wire; the relative Speed of the Magnet; the number of turns the conductor makes, etc.  It can be said that the Moving Flux lines "cutting" the conductor's path induces an Electro Motive Force, an "E.M.F." This is the generation of Electricity.

(Courtesy: http://www.williamson-labs.com/)