What is BIOS?
BIOS stands for Basic Input Output System.
All computer hardware has to work with software through an interface. The BIOS gives the computer a little built-in starter kit to run the rest of softwares from floppy disks (FDD) and hard disks (HDD). The BIOS is responsible for booting the computer by providing a basic set of instructions. It performs all the tasks that need to be done at start-up time: POST (Power-On Self Test, booting an operating system from FDD or HDD). Furthermore, it provides an interface to the underlying hardware for the operating system in the form of a library of interrupt handlers. For instance, each time a key is pressed, the CPU (Central Processing Unit) perform an interrupt to read that key. This is similar for other input/output devices (Serial and parallel ports, video cards, sound cards, hard disk controllers, etc...). Some older PC's cannot co-operate with all the modern hardware because their BIOS doesn't support that hardware. The operating system cannot call a BIOS routine to use it; this problem can be solved by replacing your BIOS with an newer one, that does support your new hardware, or by installing a device driver for the hardware.
You can change hardware configurations that are stored in the CMOS, or Complementary Metal Oxide Semiconductor.
To perform its tasks, the BIOS need to know various parameters (hardware configuration). These are permanently saved in a little piece (64 bytes) of CMOS RAM (short: CMOS). The CMOS power is supplied by a little battery, so its contents will not be lost after the PC is turned off. Therefore, there is a battery and a small RAM memory on board, which never (should...) lose its information. The memory was in earlier times a part of the clock chip, now it's part of such a highly Integrated Circuit (IC). CMOS is the name of a technology which needs very low power so the computer's battery is not too much in use.