Joe at BitWorking.org has a great essay, along with a great follow-up comment, about, well, levels of abstraction, and whether it's worth it to do things like provide RSS feeds with xhtml:body. It really is an interesting discussion, and best of all, Joe provides one of the best illustrations of the different levels at which to understand a computer I've seen.
If you are ever working at a very low level like this you can attach a scope to different points on the circuit and watch the pulses go by, and see for yourself that the system simulates a digital system. Yes, simulates. All the transistors, resistors and capacitors are really analog circuits that eventually settle into one of two states. Now they settle pretty quickly, but the egdes aren't those beautiful step functions you see in the product spec sheet.
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