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Refer your query to wikipedia.. You need to have basic knowledge of a CPU architecture and digital circuitory to understand all the terminology though.. Not much difficult btw..

Quite well, usually.

Seriously now, if you are not prepared to spend a fair amount of time researching answers to your question, treat it like magic.

"Any sufficiently advanced technology is indistinguishable from magic." Arthur Clarke
 
I agree with JSC, as far as your average user is concerned its a little black box full of magic dust that thinks and does math and thats all they need to know.

If you wish to understand how they physically function prepare to spend several hours reading about semi conductors, digital logic, and computer architecture, after about 10 hours you should have a loose grasp of what is actually going on in the little magic box.
 
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