The reservoir holds the coolant. The pump is usually located under the reservoir and it pumps the water through the pipes. The pipes connect to a block that sits on the cpu. The water flows through and cools the CPU. The heated water runs from the cpu to the radiator that cools it back off. The radiator has four 120mm fans on it to speed up the cooling process. Same as a car really.
The blue liquid is water that is mixed with a biocide and a dye.
Ill add pic showing not only the parts of the system but my amazing MS paint skillz.
