Modern flamenco guitar means the creative innovations Paco de Lucia introduced in this field regarding rhythm strumming, improvisation, modern harmony applied to flamenco, new sound colors with new instruments, phrasing, arrangements and even the way to accompany cante which, by the way, generated changes in the way singers and dancers performed.
Some specific examples, between others, are:
1) Playing a guitar solo accompanied by hand-claps or by other instruments
2) Making arrangements in such a way that the singer would get a secondary role on a piece.
3) Creation of many right hand techniques.
4) Modern harmony development applied in a traditional flamenco context.
5) Changes in the morphology of guitar itself.
6) The creation of flamenco as an style and not as a folklore.
The revolution of the great Paco de Lucía is such that we can divide flamenco history in 2 ages: 1) The Pre-Paco de Lucía Flamenco Age and 2) The After-Paco de Lucia’s Contributions Age. Here you can see graphically the difference between both: http://rdiaz.org/rdpacoart2.html
To have an idea about the traditional flamenco guitar masters like Ramon Montoya, Niño Ricardo and Sabicas, you can visit the following link: http://rdiaz.org/rdpacoart4.html
In the modern flamenco style you can use many elements from other musical styles as well. The following is a good example: http://rdiaz.org/rdvideo462.html
Paco de Lucía’s made such a huge change that his technique and style is very useful and versatile not only in the flamenco field but in other musical styles.