A computer processes information. A toaster processes bread. Although it's a simpler device, a toaster is a good way to demonstrate the four components of computer processing: input , storage, processing, and output. Just watch the animation on this page for a moment.
Both a toaster and a computer have physical parts you can touch such as the keyboard and mouse. We call these parts hardware.
Here the similiarites between toaster and computer end and the differences begin. Only the computer has something called software that enables it to figure out what to do with the input you give it. You can't touch software. Software gives the computer the ability to process many kinds of information. In contrast, all a toaster can process is bread (and the occasional waffle).
Another difference is a computer has a microprocessor. The microprocessor is the device in the computer that performs most of the tasks we ask the computer to do—from playing computer games to graphing the number of people who prefer cricket to curling. The microprocessor reads and performs different tasks according to the software that instructs it. This ability is what makes the computer such a versatile machine.
The key thing to remember is this: both computer and toaster have four basic components to how they operate (input, storage, processing, and output.) Unlike the toaster, the computer is unlimited in the things it can do.