Microcontrollers differ from microprocessors primarily in their design and application. Microcontrollers typically integrate a CPU, memory, and I/O interfaces onto a single chip, making them suitable for embedded systems in devices like home appliances, automotive systems, and IoT applications. In contrast, microprocessors are designed for general computing tasks and often require external components to function efficiently. Their architecture allows for higher processing power and multi-tasking capabilities, which makes them suitable for PCs and servers.