The first liquid crystal display was made by RCA in 1968. But now, you can find them almost everywhere.
The liquid crystal in the display is a special material that
changes its structure when you apply electricity to it. One of the
things that changes about the material is whether it reflects or
absorbs light. When the material has and electric potential on it, it
changes it structure and absorbs light. That means the spot looks
black. When it reflects light, it will appear white. When you carefully
adjust the potential, the material will change to different chaged of
grey (a mix of black and white).
Now comes the really cool part. If you put a little red filter in
front of the liquid crystal, then you have a dot that changes from
black to red and all the shades of red you want. If you put that next
to a green one and a blue one, you can make all the colors of the
rainbow by mixing different amounts of each color. It you mix
red+blue+green, you get white. If you mix red+green, you get yellow.
For more information, you can check out How Things Work: LCD's
(republished on 07/17/06)