In a computing context, the term ‘hardware’ refers to the electrical parts and components inside a computer system which power it. The operating system (such as Windows 7) and other software (for example Firefox) are then installed upon – and make use of – the hardware parts and components.
One type of hardware is a Hard Drive. This component stores data on a permanent basis (i. e. after the computer is turned off). Examples of data stored would include the operating system, software, pictures, music and other files.
Another example of hardware would be the Central Processing Unit – also known as the CPU or the processor. This is the ‘brains’ of a computer system in that it's responsible for carrying out all the instructions and computations for the system.
RAM (Random Access Memory) is another hardware component. The RAM temporarily stores data generated by the computer, and once the system is switched off the data in the RAM is erased (unlike data in a Hard Drive). For example, if you are typing a letter up but you have not saved it yet, the letter data would be stored in the RAM. Then when you save the document, it would be saved in a more permanent manner to the Hard Drive.
There are just three types of computer hardware parts. Other common components include the following:
Motherboard – This is the large rectangular component which all the other pieces of hardware connect to. This is where its name is derived from (i. e. the mother board).
Power Supply Unit (PSU) – This supplies power to the various hardware components. It gets its power as AC (alternating current) power from a mains wall socket, and converts it to lower voltage DC (direct current) power which can then be distributed to the hardware components in a safe manner.
Optical Disk Drive – You can insert CDs and DVDs into this for them to be used by the computer system.
Graphics Card – This is a relatively powerful component which generated and outputs graphics to the computer monitor. This isn't required in a system, although all gaming computers have one.
Sound Card – This generates and outputs digital sound (audio). Like graphics cards, not all computers have these although systems which are built with audio creation and manipulation in mind will usually have one.
Case – This isn't hardware per se. It does, however, house all the above computer components and it comes with a power/reset button, USB inputs and more.