Arduino designs and manufactures single-board microcontrollers and microcontroller kits for constructing a wide variety of digital devices that interact with objects and their environment to accomplish several tasks.

Since Arduino is licensed under LGPL. It allows any manufacturer to build Arduino boards and develop its software. Furthermore, Arduino is an open-sourced hardware and software platform which allows its users ranging from novices who are just getting started to senior developers to tinker and modify the Arduino to create their own version that suits their ideas and needs best.
What Is A Microcontroller?
A microcontroller is a type of integrated circuit (IC) or chip which are often found in devices at home and virtually everywhere. Infact there probably are quite a few at your home right now. They are usually incorporated into electronic circuitry. Usually a microprocessor is regarded as the brain of the CPU in a computer. Micrcontrollers are the integrated circuits that process the instructions in a computer. Hence we can say that a micrcontroller is a specific type of microprocessor.

Features Of A Microcontroller:
It has built in input/output capabilities inorder to read and write data is coded into it and for interacting with outside sources like computers, LEDs, motors, etc. A microcontroller unlike a microprocessor can be connected directly to switch boards, LCD displays, LEDs and other simple electronic devices/instruments.
Micrcontrollers are generally used in low to medium complexity and specific tasks unlike a microprocessor which is used in more complex hardware like computers where they are used to crunch numbers and output heavy data.
You can see microcontrollers often being used in portable devices running on batteries. E.g Camera’s. They are almost always low powered and don’t take a lot of power.

The ram in a microcontroller can average from around 64k to as low as 1k unlike its counterpart in the PC.
Microcontrollers are used for controlling engines and displaying information on dashboards.
Digital cameras use microcontrollers to handle inputs from buttons clicked.
TV’s use microcontrollers to sense inputs by remotes and buttons on them.

What Is An Arduino Microcontroller?
An Arduino microcontroller is one that is based on the open source hardware/software programming platform named Arduino which are based on the Atmel microcontrollers. Open source means the circuitry and the software that is used in these Arduino microcontrollers are free to be used and modified by the people to their liking. This opens a new horizon for development that can be done by both novices and advanced players in the field and has fostered an entire community that helps each other in taking full advantage of the modifications that can be done to the Arduino.

The Arduino microcontroller can be told what to do by connecting it to a PC with the help of a USB cable and then using the Arduino IDE to write the required code. This code can then be exported to the Arduino board and run.