A microcontroller is a small computer on a single integrated circuit chip that contains a CPU, memory, and input/output peripherals. It works like a computer but without an operating system and can be programmed to control machinery, appliances, and other devices. Microcontrollers have been used since the 1970s and examples include the Intel 8248 and those found in devices like Arduino boards and automobiles due to their abilities to save space and time in hardware and software applications.