Light is polarized. That is, it has components which oscillate up and down and left and right. There are materials which can only allow certain polarizations through them. Polarized lenses on sunglasses help to reduce glare by not allowing the polarizations that come from reflections through but allowing other light through.
Because all light can be broken down into two perpendicular polarizations, two types of polarizing film can be used to block out all light. That is, if you take two pairs of polarized sunglasses and rotate them so that the lens of one is over top of the lens of the other and the glasses are at right angles to each other, no light should come through the combination of the two lenses. The first lens will block out light in one polarization and the second lens will block out the rest.
An LCD depends on this sort of blocking.
In an LCD, there are two polarizing films arranged in a very similar manner as what I just described, so that no light can pass through them. A special type of material -- a "liquid crystal" which has a certain structure but can tend to "unwind" in the presence of heat or electricity is placed in between them. This crystal's structure twists and, as it twists, can cause light of one polarization to twist with it.
As a consequence, if the two films are placed exactly the right distance away from each other with the liquid crystal between them, light will pass through the first film, get polarized, and will then twist down the liquid crystal until it is perpendicular to its original polarization and will pass through the second film. Thus, because of the liquid crystal, light WILL pass through this arrangement, however it will be polarized on the other end (this is one of the reasons for the way LCDs look -- the particular quality of the image, especially when looked upon at certain angles).
Now, what allows a computer or some other controller to actually make a display out of this is that those liquid crystals can actually be manipulated by electricity to "straighten out." By applying an electric current to the liquid crystal, it will stop twisting the light. As a consequence, light at that point will once again get blocked by the combination of the two polarized films.
A matrix of these LCD pixels can be built and each pixel can be turned on (causing a black lack of light) or turned off (causing light to pass through) in such a way that allows images to be displayed.
Other arrangements of film, crystal, and film can also be used to cause an inverse effect -- so that when electricity is not applied, no light can pass through. Similarly, the light that sits behind each pixel can be a different color. By putting a red pixel, a green pixel, and a blue pixel in close proximity, colors can be formed.
LCD technology is constantly evolving. These are just the basics of what makes it work. Different liquid crystals are being used to create different LCD materials, and different types of control are being used to create different types of LCD displays. It can be very complicated, but all of these new technologies depend on a liquid crystal which can bend and unbend light and polarization films which can block out light
