A control unit is circuitry that directs operations within the computer's processor by directing the input and output of a computer system. The processor then controls how the rest of the computer operates (giving directions to the other parts and systems). A control unit works by gathering input through a series of commands it receives from instructions in a running programs and then outputs those commands into control signals that the computer and other hardware attached to the computer carry out.
The control unit is basically circuitry inside the CPU, controlling the operations inside the CPU and "directing traffic" in a sense. The functions a control unit performs can depend on the type of CPU, since the varying degrees of architecture between all the different CPUs will determine the functions of the control unit.