The guitar is inherently a very quiet instrument (yes, I know it's obvious) and gets lost in anything other than a small, intimate environment.
Most piezo pickups sound awful, generic and nothing remotely like an acoustic instrument so, in most cases, the only alternative is a mic.
Trouble is you end up rooted to the spot if you want to have consistent volume and avoid feedback which is a bit distracting when you're trying to concentrate both on your performance and not subjecting the audience to ear-splitting feedback.

A really good new alternative, for the guitar anyway, is Fishman's Aura system which clones the tone of a specific guitar-in my case a Gibson Advanced Jumbo-and comes as close to a mic'd sound as I've heard...and you can move around! It would be liberating if this could be adapted for other instruments as well.