It performs the calculations which turn the raw input data into the slick output we marvel on the monitor screen. A system which operates in the 300 to 400Mhz range will provide you with enough computing power to perform all mid-sized jobs, such as graphics, spreadsheets and databases. System memory is used to store data prior to and after processing. DIMM refers to Dual In-line Memory Module which is a type of high throughput memory. Memory is rated by its speed.
Computer peripherals round out a system's components and are pretty much self explanatory.
The operating system is again personal preference. In the PC world, if you are looking for security, then Windows NT would be a good purchase. But for most consumer uses, Windows 98 is a good purchase. You'll notice that I have not specified a particular brand or maker. The brand or maker of these components is not important.