A microprocessor is a computer processor contained on a microchip. It contains the central processing unit (CPU) and performs arithmetic and logic operations. Microprocessors have evolved over generations from processing instructions serially to employing super scalar processing with over 10 million transistors. They are used in devices like computers, phones, and traffic lights to process instructions and control functions. The internal architecture of microprocessors like the Intel 8086 contains a bus interface unit that handles data transfer and an execution unit that decodes instructions and performs arithmetic logic operations.