A microcontroller is a small computer on a single integrated circuit containing a processor core, memory, and programmable input/output peripherals. It is used in embedded systems to make decisions. The AVR ATmega8 is an 8-bit microcontroller based on Harvard architecture. It has 8KB of flash memory, 512B of EEPROM, and 1KB of SRAM. It contains peripherals like timers, PWM channels, ADC, and serial interfaces. The ATmega8 comes in PDIP and TQFP packages and uses three registers - DDRx, PORTx, and PINx - to communicate with its I/O ports.