The BIOS is a ROM chip which contains instructions that allows the CPU to talk to the monitor, keyboard and other peripheral devices connected to the PC. These instructions are loaded in the chip at the factory and can not be changed by your PC.
The BIOS chip also contains the instructions for the POST or Power- On Self Test, which checks out every component at start-up time to ensure they are working properly.
Finally, the BIOS chip contains the instructions that load the operating system into RAM after the POST has been completed.
BIOS chips also come in many makes and models. If your PC is over two or three years old, you may need to upgrade this chip to enable your PC to talk to new peripheral devices on the market.