If your electric guitar has 2 or more pickups, having the volume or output balanced between them is extremely important. Especially on a Stratocaster style guitar which of course has 3 separate pickups.
Let's start at the bridge or treble pickup. Near the bridge the strings are much more taut and don't have a chance to really vibrate, so this pickup should be the closest to the strings. At the other end, the bass or neck pickup tends to be louder by nature because the strings are much looser and have a greater opportunity to vibrate. Therefore this pickup should be much farther away from the strings. On a Strat where there happens to be a middle pickup, as you can guess it should be half way between the relative height of both the treble and bass pickups.
What I usually do to set the pickup height on a Strat is depress either E string at the last fret (21st, 22nd or whatever) and be sure the string is about 1/8" from the pole piece on the treble pickup. I then adjust the middle and bass pickups as mentioned above.
If the pickups are too close to the strings you can end up with some rather ugly overtones, particularly on the low E and A strings - listen for it and adjust accordingly.
If the bass pickup is too close, the magnetic pull from the pickup can actually yank the string down towards the body making proper intonation nearly impossible! To combat this problem, try angling the pickup slightly down at the 6th string and or if the pickup has individually adjustable pole pieces just screw the 6th string one down a bit.
The final test is to plug the guitar into an amp and flick the pickup switch back and forth to be sure all 3 pickups have a balanced output to each other. Often times a guitarist will want the treble or bridge pickup to be just a bit louder than the other two, but not to the point where it's overpowering.
With humbucking pickups you usually can have them a bit closer to the strings than what would be the norm for single coils. This is because with a single coil pickup the magnetic pull is concentrated on a very narrow area of the string. With a humbucker there's 2 coils which affect a much wider area of the string and causes much less magnetic pull.
On most humbuckers at least one set of pole pieces per pickup are adjustable. This is a great feature because it allows you to balance the volume of each string!
Greigg Fraser is a guitarist and recording artist from Ontario, Canada who produces totally original instrumental compositions melding both clean and tortured, distorted rock guitar with fusion, new age and pop overtones.
His latest CD is entitled "Under The Radar".