Suppose you walk to the other end of your house or apartment. You almost certainly walked around the walls and furniture, and through the doorways, automatically. You didn't visualize doing these things prior to doing them; you just desired to be in another room, and you went there.
Take walking itself - unless you're training to be an athlete, you don't consider the motions of your legs; you simply desire to go forwards, and you do. That's unconscious.
Now, suppose you go to a restaurant and look at the menu deciding what you want. You probably contemplate some of the choices before making up your mind. Perhaps you imagine the dishes and see how you react to the taste, or recall previous occasions on which you had similar food and what your opinion of it was. Somehow you select one of the choices, perhaps by choosing something similar to what you've had before and liked, or something unlike anything you've had before. This is conscious.
For another example, consider technical work, such as integration of complicated equations, or computer programming. Almost all of these tasks will be performed in several steps, and after each step, you'll need to think about what to do next. Perhaps you'll even have to try several possibilities before finding one which works. These things are very conscious activities.
Why use the unconscious at all, instead of doing everything consciously?
The conscious mind is limited in the number of concepts it can hold simultaneously. Historically, this limit has been found to be approximately seven.
Seven concepts isn't really all that much, particularly if the concepts are small and simple. Suppose that the most complex concepts you could use with your vision were lines and curves. It would be impossible to keep most single words in your mind at once, let alone a full sentence. The unconscious is there to help - it interprets the shapes for you, and presents your conscious mind with letters and words instead of lines or dots. The unconscious handles the simple things, allowing your conscious mind to work in larger and more complex concepts. This way, your seven available slots can go further and handle more.
Thus, the unconscious mind extends the capabilities of the conscious mind.
If the unconscious is so great, why not let it do everything?
The unconscious mind doesn't have flexibility. It's capable of learning one way of doing something, and one response to a situation. When you know something very well, you can do it automatically and unconsciously. Sometimes, however, there are things which you know something about, but do not know well enough to do automatically from start to finish.
For example, you can probably walk or drive to places you go on a regular basis without being aware of the turns you take on the way. What, however, of a trip to a place you haven't been before, but have directions to? You don't know that well enough to do it automatically. The conscious mind, however, can handle situations which are not understood well enough to be automatic yet. It allows you to consider the route you are taking, look at multiple possibilities for the next segment, and select one. Thus, you can proceed according to your directions, stopping to consider the available streets and selecting the one which seems most likely to be correct, even though you aren't sure. The unconscious can't do this; the procedure you use to select the most likely street when you're not sure is too complicated for it.
With the unconscious, you can perceive a situation and act. The same situation will always lead to same sort of action. With the conscious mind, you can generate intermediate representations and contemplate multiple possibilities prior to acting. This is very useful when you don't know enough to be sure about what you want to do.
Thus, the conscious mind extends the capabilities of the unconscious mind.
If you find yourself asking which of these explanations is true, you have not quite got it yet. Go meditate on the nature of truth for awhile, and then come back and read this section again.