There is an item in the game called red stone dust basically it functions as electricity. It can be used to set up computing system using various gates, and flip flop type circuitry and even has repeaters that can function as quasi RAM. Furthermore you can use Red Dust Torches (an item made with the dust) to light up in an LED fashion. Which can be used to illuminate certain clear blocks with colored tapestry on it.
Basically if you build a large enough "screen" you can illuminate the individual "pixels" with various command inputs.
Furthermore you can use this technique to essentially move a group of pixels across the "screen" by using different controls.
If you have say 4 controls (up left down right for example), and 2 action controls (say to stab a nearby pixel) you could emulate a Nintendo controller. Using the Bit system you could say set up a game of Pac Man, or Dig Dug or something like that where your movement and actions "destroy" pixels.
It is very very interesting the possibilities of it. In a random youtube vid (sorry can't find link will post if i do) some guy is attempting to build a computing system that is capable of producing a "Mine Craft" simulation, within mine craft.
Its way over my head, I just saw a video on you tube of crazy computing with the prospects of the future being mentioned, and an 8bit system isn't really that complex when you think about it.