Computer RPGs grew out of tabletop RPGs (such as Dungeons & Dragons), but are now so common and popular that they are better known and understood. Indeed, if you've never played a tabletop role-playing game, it's hard to imagine what it's like.
If you have played a tabletop RPG then skip this paragraph. In a tabletop RPG one player is the game master (GM). The GM describes, by talking, what the players experience. The other players, each with a character, describe what their character does. Dice are often used for conflict resolution. For example, the GM might say to the players "The plane you're in starts making strange noises. The pilot looks back with a frightful expression on his face." One of the players might say "I'll look for a parachute." The GM says "roll your perception." The player uses the scores on his character sheet in combination with the rules of the game to know what dice to roll to determine whether he or she was successful. Note that the entire gameplay can happen with no more visual aids than the gestures and facial expressions of the players. That's a little bit of what it's like. The GM comes up with an "adventure" and the players play through it.
I get the feeling that people who have played computer RPGs but never tabletop RPGs figure that the tabletop RPGs are like the computer ones but slower and with bad graphics. But I play tabletop RPGs for very different reasons than computer RPGs.
One concept that is of central importance to computer RPGs (CRPGs) is that of "leveling up." Although the concept is directly taken from Dungeons & Dragons (D&D), it is of much greater importance in CRPGs. The idea is that after you gain experience points through activity (usually fighting) and when you get enough you can go to the next level, which gives you more power. This is necessary to complete stand-alone RPG games, but for Massively-Multiplayer Online Role-Playing Games (MMORPGs), such as World of Warcraft (WoW), the goal of leveling up appears to be an end in itself. Here is a quote from a recent blog post:
Even prior to getting my hands on Guild Wars 2, my interest in WoW was inordinately low. For a long time after I began playing in 2008, it was my go-to game. I sank countless hours into it, although once in a while my attention would wander and I would cancel my subscription as the limited time I spent playing wasn't worth the $15 monthly charge. As Wrath of the Lich King approached, I became reinvested in the game and rushed my way to level 80 once the expansion hit. After reaching the level cap and sampling the end-game content, the inability to level up further led to me losing interest. I canceled my subscription, only to become excited once again when Cataclysm neared its launch. I began playing and enjoyed it for a period of time, but before I could even reach the new level cap of 85, I suddenly lost all desire to play. I assumed I just had too much else to play and that Mists of Pandaria would drag me back in once again.from http://www.1up.com/do/blogEntry?bId=9113345
As you can see, the player got bored of playing when their character could no longer advance in levels. This is interesting in part because the stories that many RPGs are inspired by, such as The Lord of the Rings, has characters that don't level up. Imagine wanting to stop reading Spider-Man stories because Spidey wasn't getting more powerful. He's obviously been level-capped!
Anyway, in tabletop RPGs (TTRPGs), if someone is this obsessed with leveling up they are derisively called a "munchkin," a term for a player who cares for nothing but maxing out their stats and leveling up, rather than caring about playing an interesting character, being a part of a good story, etc.
The fourth edition of D&D appears to be heavily inspired by WoW, and the rules appear to encourage munchkinism. This opinion is based on reviews of the game; I 've not played 4th edition D&D. However, though a great many TTRPGs have leveling up, it's often a slow process and it's not the reason people are supposed to play it. Doing well in the game, and even making progress, is a narrative consideration, not merely a question of getting more powerful. If you're on a quest, your goal is to complete the quest, make the story interesting, come up with clever solutions to problems, and have fun doing it. Gaining experience and powers is kind of fun, but it's not supposed to be the point-- kind of like playing sports. It's great if it makes you healthier, but I would hope you're enjoying the sport anyway. Some TTRPGs games have no leveling up at all.
Here is a typical CRPG scenario: You go into a room, alone, and interact with a computer. You probably don't talk to anyone, but if you do they are often people you have never met in person and would not invite to your birthday party. The stories in CRPGs are either non-existent (your character is exploring a cave and killing mosters in it) or is severely constrained so that your character's actions cannot change it very much. It's more like playing through a novel than being an active participant in the way the story goes.
I play some CRPGs, but not that often. In contrast, I play TTRPGs for about three hours every two weeks. Here is what it's like: We go to friend's house and have dinner delivered. As we eat, we socialize, laugh, and catch up. After dinner we play the game until it's time to go home. These people are my friends, and playing is inherently social. The stories are fluid and often very funny. Our actions surprise the GM, and he or she changes the world and story line on the fly. This makes it interesting for everyone. The GM might present us with a problem, and have an idea to solve it, but we might come up with our own solution, one that surprises the GM. It works. This almost never happens in a CRPG.
Of course, the graphics aren't as good.
Pictured: Aside from the unusually high proportion of women, a typical TTRPG scene. From Wikimedia Commons.