A microcontroller is a microcomputer designed for a very specific task — to control a particular system. Artists are using them to create interactive art
A single chip that contains the processor (the CPU), non-volatile memory for the program (ROM or flash), volatile memory for input and output (RAM), a clock and an I/O control unit. Also called a “computer on a chip,” billions of microcontroller units (MCUs) are embedded each year in a myriad of products from toys to appliances to automobiles. For example, a single vehicle can use 70 or more microcontrollers. PCMag.com
microcontrollers: devices that essentially act as the “brain” of a small electronics project. For example, the Arduino Lilypad is a microcontroller board that is used to create wearable technology and etextiles.
Here is a great article on microcontrollers and how they work.