Components are subsections of a Product. E.g. the computer game you are designing may have a "UI" component, an "API" component, a "Sound System" component, and a "Plugins" component, each overseen by a different programmer. It often makes sense to divide Components in Bugzilla according to the natural divisions of responsibility within your Product or company.
Each component has a default assignee and (if you turned it on in the parameters), a QA Contact. The default assignee should be the primary person who fixes bugs in that component. The QA Contact should be the person who will ensure these bugs are completely fixed. The Assignee, QA Contact, and Reporter will get email when new bugs are created in this Component and when these bugs change. Default Assignee and Default QA Contact fields only dictate the default assignments; these can be changed on bug submission, or at any later point in a bug's life.
To create a new Component:
Select the "Edit components" link from the "Edit product" page
Select the "Add" link in the bottom right.
Fill out the "Component" field, a short "Description", the "Default Assignee" and "Default QA Contact" (if enabled.) The Component and Description fields may contain HTML; the "Default Assignee" field must be a login name already existing in the database.