It sounds simple that if you were given a task to switch on a fan, all you have to do is get up and turn the switch to ON position. Computers work in a similar way. The only thing is that computers work in complex way. Complexity arises because of lots of switch on and off mechanism. Suppose, switch on position of the fan is considered to be taken as 1 and switch off position is taken as 0, lets say a current passes through the circuit when switch is in 1 position and no current passes when switch is in 0 position. Similarly in a computer, 1 denotes the situation when a current passes or a voltage is applied across a circuit in a computer.
These 0 or 1 value forms a "bit". A bit is a smallest unit of data in computers.
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This sounds simple but it isn't. It gets a little bit complex. It all contains the conversion of languages. I meant that, a computer would understand everything when we will give instructions in the language which is completely understood by the computer. That language is of course in the form of 0 and 1, but we cannot understand that what is written in the form in this language (binary language or machine language). So, all this requires some programs (softwares) known as compiler, interpreter, assembler. These are programs which convert high level language into machine language (note: assemble converts high level language into assembly language). High level language is simply nothing but the language we use in our daily lives.
Going down the page from here isn't recommended at all because we'll go in detail. Basics are already over for how a computer works. Okay?
Interpreter is a program which converts high level language into machine language line by line or paragraph by paragraph whereas interpreter first read the whole program or command and then it will convert it into machine language. While assembler is a program which converts high level language into assembly language. Assembly language is also written in 0 and 1 and there is no significant difference in assembly language and machine language. Machine language being a pure language for computers and assembly language being a bit more easy to understood by a human being is the only difference which draws a partial border line between the two.
Again, both assembly language and machine language are written in 0 and 1 while machine language is more difficult to understand by humans than assembly language.