CNC stands for Computer Numeric Control. It Sounds complicated, however its quite a basic process:
These machines operate and follow their instructions based on the Cartesian Grid (an X,Y,Z grid).
The X axis is usually the longer side of the machine, with the Y axis being the shorter side. The Z axis represents the height and/or depth of the cutter.
The information sent to the machine simply goes to these coordinates. Watch this short video to see it in action: