The chapter discusses how computers represent and process data. It explains that computers use binary numbering to represent all data as strings of 0s and 1s. It describes the main hardware components inside a computer system unit, including the central processing unit (CPU), memory, motherboard, buses, drive bays, and power supply. The CPU, consisting of one or more processor cores, performs processing and accesses memory and cache to execute instructions. Factors like clock speed, cache size, and bus bandwidth impact processing speed.