We divide circuits into two kinds of categories: (1) Combinational Circuits, and (2) Sequential Circuits.
Combinational Circuits are simple circuits usually performing a computation. They don't store information, and their output(s) only depends on the input bits that they receive. Circuits that don't store memory or use history are called stateless circuits.
Sequential Circuits, on the other hand, are more complex than Combinational Circuits because they store information about previous uses (that is, the past inputs) of the circuit, and their output depends not only on the input bits but also on the memory they store. Such history-preserving circuits are called stateful.
Let's introduce examples of combinational circuits, and show how they work.