A computer system consists of both hardware and software. The hardware are the physical components of the computer like the input devices, output devices, and system unit. The system unit contains the central processing unit and other internal components. Software includes the programs and data used on the computer, and there are two main types - systems software that manages the computer's resources, and application software that allows users to perform tasks. A computer receives data as input, processes it according to programmed instructions, and produces output.