Joe Hanson of It's Okay To Be Smart explains:
Nerve signals, whether they lead to squid chromatophore stimulation or muscle contraction, are essentially electric signals. Not in the sense that there are electrons flowing through your nerves like the wires in your house, but rather because of some very nifty ion gradients and voltages across cell membranes.When an audio signal is converted to an electric signal, basically what happens inside a microphone, that electric voltage can be applied to tissues! The resulting voltage changes can trigger electrochemical signals, just like the chromatophores you see above.
The video is a view through an 8x microscope zoomed in on the dorsal side of the caudal fin of the squid. We used a suction electrode to stimulate the fin nerve. Chromatophores are pigmeted cells that come in 3 colors: Brown, Red, and Yellow. Each chromatophore is lined with up to 16 muscles that contract to reveal their color.