Each pixel of an LCD consists of a layer of molecules aligned between two transparent electrodes, and two polarizing filters, the axes of transmission of which are (in most of the cases) perpendicular to each other. With no actual liquid crystal between the polarizing filters, light passing through the first filter would be blocked by the second (crossed) polarizer.
The surfaces of the electrodes in contact with the liquid crystals are treated so as to align the liquid crystals in a particular direction. This treatment typically consists of a thin polymer layer that is unidirectionally rubbed using, for example, a cloth. The direction of the liquid crystal alignment is then defined by the direction of rubbing.
Before applying an electric field, the orientation of the liquid crystal molecules is determined by the alignment at the surfaces of electrodes. In a twisted nematic device (the most common liquid crystal device), the surface alignment directions at the two electrodes are perpendicular to each other, and so the molecules arrange themselves in a helical structure, or twist. This reduces the rotation of the polarization of the incident light, and the device appears grey. If the applied voltage is large enough, the liquid crystal molecules in the center of the layer are almost completely untwisted and the polarization of the incident light is not rotated as it passes through the liquid crystal layer. This light will then be mainly polarized perpendicular to the second filter, and thus be blocked and the pixel will appear black. By controlling the voltage applied across the liquid crystal layer in each pixel, light can be allowed to pass through in varying amounts thus constituting different levels of gray.
The optical effect of a twisted nematic device in the voltage-on state is far less dependent on variations in the device thickness than that in the voltage-off state. Because of this, these devices are usually operated between crossed polarizers such that they appear bright with no voltage (the eye is much more sensitive to variations in the dark state than the bright state). These devices can also be operated between parallel polarizers, in which case the bright and dark states are reversed. The voltage-off dark state in this configuration appears blotchy, however, because of small variations of thickness across the device.
Both the liquid crystal material and the alignment layer material contain ionic compounds. If an electric field of one particular polarity is applied for a long period of time, this ionic material is attracted to the surfaces and degrades the device performance. This is avoided either by applying an alternating current or by reversing the polarity of the electric field as the device is addressed (the response of the liquid crystal layer is identical, regardless of the polarity of the applied field).