A neural network takes input data and passes it through layers of neurons. Each neuron multiplies inputs by weights, adds a bias, and then checks if the sum is high enough to activate. Activated neurons pass their output to the next layer. This process continues until the final output layer produces a decision or result. The example shows inputs 2 and 3 multiplied by weights 0.5 each, plus bias 1, resulting in 3.5 which activates the neuron. The final output is 1, meaning 'yes' or positive decision. This step-by-step flow helps understand how neural networks work in a simple way.