An embedded system is a microprocessor-based system designed to perform a dedicated function within a larger system. It contains a microprocessor, RAM, ROM, I/O devices, and application-specific circuits. Embedded systems are used in automotive electronics, aircraft, trains, telecommunications, medical devices, military technology, smart homes, and more. Key components include a microprocessor or DSP, memory, converters, sensors, and communication interfaces. Response time, cost, power consumption, and reliability are important considerations for embedded systems.