BIOS (Basic Input/Output System)
*** also see Microsoft's I/O, Processor, and Memory Designs page (huge library of info)
When you first turn on the PC, the the microprocessor (the CPU) needs to begin executing instructions to various components on the PC, and dealing with data that is stored on the hard drive. This exchange of data into the CPU and out of the CPU is called Basic I/O (Input Output), and the information on how to do this is stored on a small ROM chip mounted on the motherboard, which contains the instructions known as the BIOS - Basic Input Output System.

The chip is hardware - ROM, but the BIOS itself is actually software, stored in the ROM of the chip.
There is a certain pecking order here.
CPU performs microinstructions, which are very simplistic - these are considered an Instruction set - not an operating system.
BIOS is the lowest level operating system on your PC. Each BIOS instruction causes an entire series of CPU microinstructions to occur The other two operating systems at work are the DOS and Windows systems. BIOS starts up the PC, and continues performing vital low-level operations
DOS (Disk Operating System) begins, and executes higer-level instructions, each single DOS instruction cause numerous BIOS instructions to be performed
Windows begins, and issues instructions to both DOS and the BIOS to perform the highest level instructions of all

Windows NT, and the new Windows 2000 (which is basically Windows NT 5), does away with the DOS layer, although it can still emulate DOS sessions if need be - for cases where you have DOS-based programs that you need to run.
The BIOS software has a number of different roles, but its most important role is to load the operating system. When you turn on your computer and the microprocessor tries to execute its first instruction, it has to get that instruction from somewhere. It cannot get it from the operating system because the operating system is located on a hard disk and the microprocessor cannot get to it without some instructions that tell it how. The BIOS provides those instructions. Some of the other common tasks that the BIOS performs include the following:
When you turn on your computer, the BIOS does several things. In its usual sequence, the BIOS:
Checks the CMOS Setup for custom settings
Loads the interrupt handlers and device drivers
Initializes registers and power management
Performs the power-on self-test (POST)
Displays system settings
Determines which devices are bootable
Initiates the bootstrap sequence
The first thing the BIOS does is check the information stored in a tiny (64 bytes) amount of RAM located on a
complimentary metal oxide semiconductor (CMOS) chip. The CMOS Setup provides detailed information particular to your system and can be altered as your system changes. The BIOS uses this information to modify or supplement its default programming as needed.
Interrupt handlers are small pieces of software that act as translators between the hardware components and the operating system. For example, when you press a key on your keyboard, the signal is sent to the keyboard interrupt handler, which tells the CPU what it is and passes it on to the operating system. The device drivers are other pieces of software that identify the base hardware components such as keyboard, mouse, hard drive and floppy drive. Since the BIOS is constantly intercepting signals to and from the hardware, it is usually copied, or
shadowed, into RAM to run faster.