Firmware is embedded software that makes hardware function properly. Many household devices like washing machines, dishwashers, TVs, and surveillance cameras have firmware on them acting as an operating system that controls all the functions of that device.
Computers have firmware that detects the hard drive and tells it how fast to spin and when to stop. In smartphones, tablets, smart TVs, and smart watches, the firmware allows the hardware and the operating system to communicate.
Manufacturers often provide firmware updates that can be downloaded to your device. Computer manufacturers especially will provide firmware updates for several years after a purchase is made.
The latest version of firmware resolves many issues a device might have, so it's important to keep your firmware up to date.