The processor is capable of manipulating data in a sort of numerical form in a range of different ways. It's tedious, but it's what the processor has to be told if it's going to do anything at all. A set of this type of instructions is called a program and these are stored in the computer's memory while it's doing it. When a program isn't being used, it can be stored on disk and only brought into the memory when it's needed.
Every computer system requires a whole set of programs to do the things it needs to do.
Except when the power's off, computers are never idle. The processor's always running around and doing this and that, checking things and waiting for something to happen. The OS keeps an eye on all of this as well as providing some basic functions like, moving, editing and deleting files, formatting disks, configuring the system how you want it etc. Configuration is the process of setting up all the changeable things that affect the way the computer works. It ranges from basic things like screen colours, to much more complicated things related to the internal workings of the system.