The CPU is like a fancy calculator with billions of transistors that perform complex computational tasks by combining logic gates. It synchronizes its state using a clock generator, with faster clock pulses leading to quicker computations. CPUs interact with system memory in a four-step cycle: fetch, decode, execute, and store. The ALU performs calculations, and modern chips have multiple cores for parallel processing. Gamers sometimes overclock CPUs for more performance. Alex discusses advanced concepts like Apple silicon and performance benchmarking.