MicroChannel was an attempt to address, once and for all, the problems that had come to plague the PC bus (later known as ISA). These included slow bus speed, a limited number of interrupts, lack of bus-master support, complex configuration and poor grounding. Most of the problems were not a big issue in the early days of DOS, but came to the surface as the range of tasks and peripherals grew.
Another problem for IBM was that the ISA bus was deeply linked to the Intel 8088 CPU architechture. Cards built for ISA would simply not work in any other machine. IBM was already investigating the use of RISC processors in desktop machines, and could, in theory, save considerable money if a single bus could be used across their entire computer lineup.
A final problem was that IBM had lost control of the hardware market for PC's. Anyone could create an ISA card and plug it into anyone's computer. By creating a new standard IBM would regain control, and this time the specifications would require licensing. This largely explains why they created MCA, as opposed to selecting an existing standard like NuBus which would have saved them a lot of time and money.
MCA was primarily a 32-bit bus, but the system also supported a 16-bit mode which was primarily to lower the cost of connectors and logic in Intel-based machines like the PS/2. The situation was never that simple however, as both the 32-bit and 16-bit versions had a number of additional optional connectors which resulted in a huge number of physically incompatible cards. On the upside, MCA also moved the pins around to minimize interference, a ground or a supply was located within 3 pins of every signal.
The data rate was increased from ISA's 8MHz to 10, for a small improvement in performance. However the communications was now driven by the bus as opposed to the CPU, so real throughput was greatly increased, about four times, to 40MBps (of a theoretical 66). With bus-mastering the card could talk to each other directly so the performance was independent of the CPU. This led to possible collisions when more than one card would try to master, but MCA included an arbitration feature to correct for these situations, and also allowed a master to use a burst-mode where they had complete control for up to 12mSec.
Multiple busmaster support and improved arbitration means that several such devices can coexist and share the system bus. MCA busmasters can even use the bus to talk directly to each other at speeds faster than the system CPU, without any other system intervention. Arbitration enhancement also provides that we have better system throughput since control is passed more efficiently. Advanced interrupt handling refers to the use of level sensitive interrupts to handle system requests. Rather than a dedicated interrupt line, several lines can be shared to provide more possible interrupts.
The final major improvement was POS, the Programmable Option Select, which allowed all setup to take place in software. This feature is taken for granted now, but at the time setup was a huge chore for ISA systems. POS was a simple system that included device ID's in firmware, which the drivers in the computer were supposed to interpret. This is the basis of plug-and-play today.
Although MCA was a huge improvement over ISA, it was limited only to IBM hardware. It was not compatible with either EISA or XT bus architecture so older cards cannot be used with it. This small market made for very high prices, and IBM didn't help matters by charging high licensing fees. MCA was largely ignored, and with the introduction of PCI, MCA swiftly disappeared.