My house was built in 1903. It was originally something like 700 square feet. Over the years it had an addition put on the back, and a basement dug out. At some point, someone paid to put in eight-foot tall ceilings, leaving the ones at ten feet in place to form an odd dead space. The point is that it's old and heavily modified.
One of my earlier projects was to put in a pull-down ladder so access to the attic was easier. At the time, one of the reasons I did it was so I could use storage space up there. After insulating it--none of the house has any insulation--I put some plywood down so I could store boxes above the 'new' (like fifty years old) section.
The problem was that while I was up there I got a look at the original chunk of the house. It still had knob and tube wiring. Thankfully, it was only for one branch circuit. Everything else was modernized or installed much later--from the basement (that didn't exist when this stuff went in). I've posted a picture so you can get the idea.
The name comes from insulating knobs that hold the wires and insulating tubes that they insert through joists/rafters to run wires through. In my house, they ran buses of wire on ceramic insulators. Note that these insulators were nailed to the rafters where any roofer might damage the wiring. Then, when they needed to run power to a fixture or receptacle, they ran a set of wires (one hot, one neutral; this is long before the notion of grounding) down the insides of a couple of ceiling joists.
The best part is that any time you need power, you just splice into those buses. After perhaps eighty years of service, this left endlessly spliced wires all over the place. The modern National Electric Code requires all wire junctions to be in a junction box (with a few esoteric exceptions).
That's not to say it wasn't a valid way to do business. A properly installed K&T setup is nominally safe. In my case its served for likely more than eighty years without the house burning down. What creeped me out about it personally is that the wire insulation becomes brittle. When I was installing a new bathroom fan (inline in a six-inch duct), I had to deal with this stuff and I had the experience where you flex a wire and the insulation just snaps like a twig. The wire remains fine which is the problem. It will happily carry voltage through that insulation break, ready to do some real damage. No doubt that explained a lot of seemingly needless applications of electrical tape that I kept running into.
So, after almost three years of vaguely worrying about this, I decided to fix it. I bought a hundred feet of 12/2 (I know I only need 14/2 but I purposely installed heavier wire), a hundred feet of EMT (electrical metallic tubing), and climbed up there with my fish-tape and bender to replace it. Ten junction boxes later I had gone through about 70 feet of EMT. I'm sad to say it took me a total of about twelve hours. No doubt an electrician could have done it in half the time.
Most of the receptacles and fixtures are still wired with lines that are older than dirt, but the bus is all up to code. Baby steps. I worry less now.