The blue wires go to ground. They are the pickup's shield and also ground the metal parts.
The black wire is the common return from the pickup's coil, and also goes to ground, unless you are using a preamp with a floating ground like an Audere.
Here's Bill's own diagram, in his own handwriting for a P/J set.
Buzzing when you don't touch the strings is a shielding issue, and/or a ground problem at the amp, usually from the output it's plugged into. Also if you are around light dimmers and other sources of noise, the shielding might not totally get rid of it.
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Last edited by SGD Lutherie : 01-17-2013 at 06:36 PM.