How does hardware interpret data?

I have been thinking about the nature of hardware and software, and I read that the lowest level 'programmers' were actually hardware designers, in the sense that they had to connect/disconnect wires in order to get the desired output (i.e a sequence of flashing lights or something). Nowadays we are kinda doing the same thing, except we can keep bits in memory and things run extremely fast. I was wondering how the hardware interprets the sequence of bits that it encounters. This is probably something I should be reading up on but I figured i'd try getting a lay men's explanation first.
Thanks.

Depends on what you mean by interpreting the bits - the hardware either sees the voltage on the line as high (arbitrarily we can say 2.5-5V) or low (anything less than that). As for dealing with the logic, that can be done using transistors.

They way the hardware interprets the sequence of bits provided to it depends on how the hardware has been organised. From a high level view a piece of digital electronics is an organisation of ports, like AND-ports, OR-ports etc. and other (higher level) logical components, like flip-flops, counters, multiplexers, memories etc. Organising those hardware components can be seen as a kind of programming.

Microprocessors are quite complex things, especially modern microprocessors, because they are equipped with a lot of stuff to do for example multi-media operations and that kind of things. A more easier piece of electronics to study is the PLC (programmable logic controller).

Using Google to search for "introduction digital electronics", I found a lot of sites. Like:

http://richardbowles.tripod.com/dig_...1/chapter1.htm

Thank you both very much. Shiro your explanation actually helped a lot in itself, and thank you for showing me what to search for, I'll post any questions if I get confused on anything.