The AM Detector
The top picture shows the effect of passing the 10.7MHz modulated waveform
through a detector diode. Because a diode only allows current to pass in one
direction, the bottom half of the waveform has been removed but the output still contains
the 10.7MHz 'carrier wave' in addition to the audio.
In the bottom picture, the Radio Frequency capacitor has been added as a trapdoor to ground. Now, most of the 10.7 MHz will be 'shunted' to earth. The lower frequency audio will not pass through the capacitor thus leaving the output signal mostly audio.
The signal is still not suitable for passing to an audio amplifier though. It will still contain some 10.7 MHz component but, more importantly, it is now a varying DC signal (as shown on the oscilloscope trace, it is all above the central zero line) which is unsuitable for feeding into an audio amplifier.