LCD is short for liquid crystal display, a type of display that is used in digital watches and many portable computers. The LCD displays utilize two sheets of polarizing material with a liquid crystal solution between them and when an electric current passes through the liquid, it causes the crystals to align. Each crystal is like a shutter, it either allows the light to pass through or blocks the light.
The monochrome LCD images usually appear as blue or dark gray images on top of a grayish-white background while the colored LCD displays use two basic techniques for producing color: the passive matrix (which is less expensive of the two technologies) and the thin film transistor (TFT) or active-matrix.
Photo credit here