The CPU, or central processing unit, acts as the brain of a computer system, executing instructions and processing data. It performs the fundamental operations required by software, including arithmetic, logic, and control functions, enabling the functionality of the system. The CPU retrieves data from memory, processes it based on programmed instructions, and sends results back to memory or to output devices. The efficiency and speed of a CPU significantly influence overall system performance, making it a critical component in determining the capability of a computer.