The micro-instruction cycle can comprises two basic cycles: the fetch and execute. Here in the fetch cycle address of micro-instruction is produced and this micro-instruction is put in a register used for address of a micro-instruction for execution. Execution of a micro-instruction simply means production of control signals. These control signals can drive CPU (internal control signals) or system bus. Format of micro-instruction and its contents decide the complexity of a logic module that executes a micro-instruction. 

One of the major features incorporated in a micro-instruction is encoding of micro-instructions. What is encoding of micro-instruction? For answering this question let's recall Wilkes control unit. In Wilkes control unit every bit of information either produces a control signal or form a bit of subsequent instruction address. Now let's presume that a machine requires N total number of control signals. If we follow Wilkes scheme we need N bits one for each control signal in CU.