Software consists of programs that run on a computer to perform functions, while hardware refers to the physical components. There are two main types of software: system software that manages computer resources, and application software for specific tasks. Hardware includes basic components needed for operation like RAM and ROMs, as well as complementary components like webcams. Common hardware components are networks, hard disks, USB drives, processors, keyboards, and monitors. Together, software and hardware allow computers to function and be used by people.