To understand how inverter technology works, it's important to first understand how microwaves work. All microwaves heat food by producing tiny electromagnetic waves -- very high frequency radio waves -- that stimulate water molecules to start vibrating. As they vibrate, they create friction, which creates heat. For this reason, foods with high water content heat up better in microwaves than dry foods such as bread.
The electromagnetic waves are produced by something called a magnetron, which converts household electricity into the waves. The electricity travels from the electrical outlet to a thermal fuse, or power transformer, which increases the voltage of the electricity. It then travels to the magnetron, which converts the electricity into electromagnetic waves. In conventional microwaves, the magnetron can only transmit the electromagnetic waves at full power -- even if you set the microwave to half-power. The difference is that when you set it at half-power, the magnetron transmits at full power for a short amount of time, then stops transmitting, then starts again, then stops again until the timer runs down.
Microwaves with inverter technology do not have a power transformer. Instead, a circuit board converts the electricity to a variable voltage that pulses between 20KHz and 45KHz. The magnetron is then able to produce a steady stream of power that can be controlled rather than short bursts of full power.
Power transformers are large, bulky and use up a lot of energy. In contrast, the circuit boards used in inverter microwaves are much smaller, lightweight and consume less power, according to the Panasonic Services Company's Technical Guide to Microwave Ovens with Inverters. In addition, the steady cooking temperatures produce food that is more evenly cooked than in conventional microwaves.