A microinverter is a small inverter fitted behind each solar panel, instead of one large inverter for the whole roof. Each microinverter converts the DC from its own panel into AC right there. The panels' outputs are then added together as AC.
The reason for this design is shade. With one large solar inverter, panels are usually wired in a chain, called a string. In a string, a single shaded panel can limit the current of the whole chain, so the loss is bigger than the shaded panel alone. With microinverters, each panel works independently. A shaded panel reduces only its own output, and the rest carry on.
Take, for example, a house in Sacramento, California, whose roof has two faces. Six panels face east and four face west. In the morning the east panels give more, and in the afternoon the west panels give more. If all ten sit in one string, the string inverter must pick one setting for all of them. With microinverters, each panel is set on its own, so each gives the most it can at that hour.
A microinverter also reports the output of every panel, so the owner can see which panel is dirty or broken. The best-known maker sells mainly in the United States, where this design is common. Roofs there often have trees, chimneys and several faces. The rule in the United States that roof wiring must be switched off quickly in an emergency is also easier to meet when no high-voltage DC runs on the roof. So the examples on this page use homes in California. In India, most rooftop systems still use one string inverter, because it costs less for each watt.
The cost is that a roof needs many small boxes rather than one, and each is built from power semiconductors. A failed box takes out only one panel, but it sits under the panel on the roof and is harder to reach. Microinverters are an example of the grid edge, the home-level equipment at the far end of the grid. Many homes with microinverters can also be grouped into a virtual power plant. The page on AC and DC explains the conversion itself.