A machine cycle consists of four steps - fetch, decode, execute, and store - that are continuously performed by a CPU at a rate of millions per second. The fetch step involves retrieving an instruction from memory, the decode step breaks down the instruction, and the execute step carries out the requested task. Word size refers to the number of bits that a computer can handle as a single unit, which is an important characteristic that influences many aspects of computer architecture and performance. Common modern word sizes are 16, 32, and 64 bits.