Microcontroller is a highly integrated chip that contains all the components comprising a controller. Typically this includes a CPU, RAM, some form of ROM, I/Oports, and timers. Unlike a general-purpose computer, which also includes all of these components, a microcontroller is designed for a very specific task — to control a particular system. As a result, the parts can be simplified and reduced, which cuts down on production costs.
Microcontrollers are sometimes called embedded microcontrollers, which just means that they are part of an embedded system— that is, one part of a larger device or system.
