Ok layman, today is the last day you will refer to the box that houses your motherboard and other components as a "CPU."
CPU stands for central processing unit. Think of your CPU as the brains behind your computer's operation. Without the CPU your computer is a large paperweight. It's much like your own brain.
What does the CPU do you ask? Like I said before the CPU is the brain of the computer. It's much like your own brain. When you want to do something your brain processes what it needs to and tells the corresponding parts to act in kind.
The CPU processes operations. Something needs to be called from RAM? The processor gets the ball moving. Need to execute instructions? Call the processor.
How it's done is a bit more confusing. With millions of transistors the Arithmetic Logic Unit (which is part of your CPU) uses logic gates to carry out simple arithmetic. Logic gates are beyond this blog post but just understand that they use binary to carry out the mathematical operations. These calculations are eventually converted into assembly code which can then perform more complex operations.
Speed is a pretty big deal with processors. I'm sure you've heard the terms megaherz and gigahertz thrown around quite a big. But what exactly does a megahertz or gigahertz mean?
It's actually pretty easy 1 megahertz = 1 million cycles per second. 1 gigahertz = 1 billion cycles per second. Understanding what goes on during those cycles... well... that's for another blog.
Fun fact: The first Intel processor only had 2,300 transistors. Todays processors have over 2 billion!