This circuit is called an envelope detector. The major advantage of this circuit is its simplicity and thus it being the most effective way to demodulate the AM signal. The components used are lesser in number and hence the cost of this circuit is also comparatively lesser. This type of simple technique is one of the reasons why AM is still a preferred method of broadcast. As you can see the first part of the circuit is the modulator circuit giving the AM signal. This is passed to the detector circuit. The opamp buffer circuit is used to isolate the two parts. This is just to simulate the separation between the two – space in real life. This detector is basically a rectifier which allows only one half of the input (this you can find out by the presence of the diode). The capacitor is used to reduce the ripples in the output wave. This is accomplished by the charging of the capacitor. It holds the charge for a certain time and discharges depending on the RC time constant (?- the product of R and C value). As an experiment put the label on either side of the capacitor and note the change in the quality of the voltage. For the distortion to be minimal, the following rule should be followed while designing the circuit: 1/fc << ? << 1/fm.