Microcontrollers are small computers that integrate RAM, ROM, I/O ports and other components onto a single chip. They are used in applications where cost, power and space are critical. The document compares microprocessors and microcontrollers, noting that microcontrollers have all components on one chip while microprocessors have separate chips. It then describes the typical internal blocks of a microcontroller, including the CPU, memory, I/O ports, timers and serial ports. Block diagrams show the connections between these internal components.