Pedal steel guitar (also called Steel Guitar) is a type of guitar, and a method of playing the instrument. It was developed from the Lap steel guitar, but there are a few distictions worth noting.
Many musicians specialize in performing on both instruments, as well as dobro.
A pedal steel guitar is typically rectangular in shape, and features only the guitar neck and head mounted on a stand equipped with footpedals. Due to the absence of any sounding body, this instrument is fitted with pickups for electric amplification. Many models feature two sets of strings. The most common configuration is ten strings, but eight-string and twelve-string boards are also popular. A number of "pedals" or levers on the underside allow the performer to change the instrument's tuning while performing.
These pedals allows for some techniques and sounds unavailable on a lap steel or dobro, which are otherwise often played in a similar fashion.
Photographs of one pedal steel guitar model are available here:  (http://www.steelguitar.com/webpix/stdpix/d10ebapr.htm)
A performer typically sits on a stool or special portable seat called a "throne" behind the instrument, like a drummer. The strings are placed much higher above the neck than on a standard guitar, and are not pressed to a fret when sounding a note. Rather, the player holds a metal slide called the "steel" in one hand, which is moved along the strings to change the instrument's pitch while the other hand plucks the strings, normally using a set of thumb and finger picks.
The lap steel guitar--and to a lesser extent the dobro--are usually played in similar fashion in that they are laid horizontally and the string pitch is controlled by a slide rather than frets. However, the similarity ends there. Because the steel bar holds all strings to the same length, it is impossible to play different strings at different lengths simultaneously on a non-pedal instrument, ruling out minor chords and other variations accessible on a conventionally-fretted guitar. The pedal steel guitar overcomes this by using a system of pedals and knee levers that sharpen (raise) or flatten (lower) one or more strings when playing while the rest of the strings remain at their normal pitch. This allows for an almost unlimited number of different chords and inversions. It also makes this a much more complex instrument to learn, and in the country music business where this instrument is most commonly used it is considered to be the instrument that "separates the men from the boys."
Pedal steel guitar traces its origin probably to Hawaii in the late 1800's. Several persons have been credited with the innovation.  (http://www.well.com/user/wellvis/steel.html). The lap steel instrument was rather popular--perhaps a fad--in the United States during the 1920's and 1930's.
Later musicians experimented with the lap steel, resulting in the pedal steel guitar.
Lap steel, dobro and pedal steel guitar are probably most assocatied with country music and bluegrass, though some players have used them in jazz and other musical genres.
The pedal steel's liquid, yearning sound has begun in recent years to be coveted by many modern musicians. In particular the rising popularity of so-called alt country has brought this instrument's beautiful sound to a much wider audience.
Because the instrument is produced in much smaller quantities than conventional hand-held guitars, it is manufactured mostly by smaller companies and custom builders. Aftermarket modifications abound, and some individual players have tailored their own setup, called a "copendent" (a contraction of "chord pedal arrangement"). Some popular brands include Carter, Emmons, MSA, Sho-Bud, Mullens and Fessenden.
Noted pedal steel players