The American Wire Gauge (AWG), is a standardized wire gauge system used for conductive wires and rods in the United States. The AWG system was devised in 1857 and has been used for non-ferrous and conductive wire ever since. This AWG system is predominantly used to size wires, rods, and other conductive metal parts in solid form from the "DRAWING" process, but stranded wires come in AWG too.
In the AWG wire gauge system, bigger numbers yield smaller wire diameters. The smaller the number the larger the wire. The reason for the backward stepping scale is the manufacturing process. As a piece of metal is "DRAWN" or pushed through a die, it is made smaller. The American gauge system originated as a relationship to the number of drawing operations used to produce a given size of wire. Very fine wire ( 20-30 gauge for example) requires more passes through the drawing dies than does larger wires (0 gauge for instance).
As we have discussed above, the diameters attributed to each AWG size are for a single, solid, round conductor as the AWG tells us the amount of material in the wire. However, a solid wire is not acceptable for all applications. To accomodate stranding, yet conform to the AWG standard, size of stranded wire is determined by the total cross-sectional area of the conductor. By sizing the metal inside the wire, not the size of the wire, we can compare in a meaningful way, a solid and stranded wire. Each should have similar current-carrying capacity as long as the material is the same. In addition, each should have similar electrical resistance. Please do note, there are small gaps between the strands of wire inside the insulation as it is braided. Due to these small gaps, a stranded wire will always have a slightly larger overall diameter than a solid wire with the same AWG size.