The keyboard matrix pulses down each of the wires, checking for a fret depressed and a strum. Once it gets a strum, it checks to see which fret was pressed at the time. It then would send the fret number along with strum from the microcontroller via usb to the computer, which would then decode the usb signal (we created our own format) and display the note played on the screen. The note played would also be stored in an incremental array on the computer until the program was closed to saved. It would then dump the information into a pre-formatted file, which could be re-opened and displaying what was previously played.
As per your actual question, yes there is a cct. Each wire on the guitar is an output from the microcontroller, the keyboard matrix cycles between them (only one is active at a time, but is cycled fast enough we can pick up at least 16th notes). On the other side, each of the 20ish frets are wired to an input to the microcontroller. The circuit is closed when a fret is pressed as an electrical current goes to the microcontroller changing the input port's state from false to true. Hopefully that clears up or explains that.