When I say "display", I mean that the computer will have a large cobblestone wall with 32 torches one way and 32 torches the other way. These redstone torches will be either lit up or darkened and will represent pixels. It will be rather far away from the user so it can be seen more clearly.
I don't quite understand these CPUs people build in minecraft. What do they do?
The same thing that the CPU in the computer or phone you are using now does.
A conceptual computer, in basic:
1. RAM - RAM means Random Access Memory. It is generic memory that can be manipulated at any time for any purpose to store values needed for the execution of programs. RAM is often connected to your screen, keyboard, etc. This is called memory mapping.
2. ROM - ROM means Read-Only Memory. It's memory that can't be written to and can only be read by the computer, hence the name. Imagine putting a cartridge into an old NES or a Gameboy. That's a chip that contains ROM for the gaming system to manipulate.
3. CPU - The CPU is the Central Processing Unit. It is the main component of any computer. Its job is to take the values stored in ROM, decode them into instructions, and manipulate RAM values to execute that instruction. It's by far the most complicated and most important part of any computing platform.