When you buy a pickup for a guitar?

Question

you install it into the guitar yourself and its just like having an acoustic electric guitar right?

Answer 1

That depends.  There are two main kinds of pickup: magnetic pickups that go in the sound hole, and piezoelectric pickups that go under the saddle.  

The advantage of the sound hole pickup is that it is easy to install (you can, if you wish, run the cable out of the sound hole although that looks crappy).  The big disadvantage is that it makes your acoustic sound like an electric, since electric guitars use magnetic pickups.  If you are going for the acoustic sound but made louder, this is not the best choice.

Piezo pickups are much better at preserving the acoustic tone and nature of the sound.  While they can be self-installed it's not a good idea unless you've done it many times before. You need to remove the saddle, possibly sand it down to allow for the additional thickness of the pickup, drill a (very small) hole in the bridge to run the pickup wire into the body, and then wire an end pin jack, possibly with onboard or outboard active electronics that need to be placed so that you can easily change the battery.

There are other pickups available that if anything are even better than the two I mentioned already but they're more expensive and more complicated to install properly.  LR Baggs, B-Band, and PUTW (Pick-Up the World) all make fantastic pickups.