The SHP5 is a preamp that is mounted in the soundhole of your acoustic guitar by the adhesive pad (on the bottom of the picture). It requires a 9 volt battery to run and has a jack socket for a piezo pickup, in addition to it's hardwired mic. It has an additional 3.5mm jack socket for the output to be run out of the guitar.
The SHP5 has four buttons. One is an LED indicator to indicate if the battery is connected and charged, one reverses the phase to assist in reducing feedback in some situations, one is a bass boost (6dB at 100hz), and the last one is an acoustic guitar amp simulator - great if the output is going to go directly to a PA.
There are additionally two sliders - a blend slider which varies the quantity of the piezo and the microphone in the overall output, and an overall volume control.