A Microcontroller is a VLSI (Very Large Scale Integration) Integrated Circuit (IC) that contains electronic computing unit and logic unit (combinedly known as CPU), Memory (Program Memory and Data Memory), I/O Ports (Input / Output Ports) and few other components integrated on a single chip.
A microcontroller has a dedicated input device and often (but not always) has a small LED or LCD display for output. A microcontroller also takes input from the device it is controlling and controls the device by sending signals to different components in the device.