The larger Atari 800 was unquestionably superior to its cheaper sibling. It offered 16KB RAM (later 48KB), full-stroke keyboard, monitor output, expansion slots, and two cartridge ports (marked LEFT CARTRIDGE and RIGHT CARTRIDGE).

This dual-cartridge slot would remain unique to the system. The expansion slots were most often used for memory expansion, but also supported display adapters and other devices. Most expansion modules came in long plastic cases and snapped in like cartridges. Later releases were just boards without an enclosure; this utilitarian design improved internal air flow. Most users outfitted the four slots with a 10KB ROM and three 16KB RAM modules to achieve the maximum standard 48KB system.

With no cartridge inserted, both the 400 and 800 boot into a simple Notepad application. BASIC had to be loaded from cartridge, which was inserted into the LEFT CARTRIDGE slot on the 800, allowing another cartridge to be used in the RIGHT CARTRIDGE slot, if needed. Because the RIGHT CARTRIDGE slot was rarely used, later Atari systems omitted this interesting, but costly, feature.

The Atari computers were pin compatible with VCS controllers, providing an excellent range of single-button digital control options. The four controller ports would not be repeated on another Atari system until 1982's Atari 5200 SuperSystem, which was a video game console based on the Atari 400, though it was not directly compatible.

A small selection of games supported the additional controller ports. The most famous of these are Electronic Arts's classic multiplayer strategy game by Dani Bunten, M.U.L.E. (1983) and Atari's own Super Breakout (1981), which accommodated up to eight players using four sets of paddle controllers. As with later versions of the Atari 5200, new entries in the 8-bit computer line would forego the extra pair of controller ports.

Atari computer software came in all shapes, sizes, types and formats, offering a wide range of cartridge, cassette and disk titles in education, entertainment, productivity and utilities.

The sound of the Atari computers was generated by the versatile POKEY chip, which would also play a role in the development of Atari's later 7800 ProSystem console. The POKEY, which also read input from the keyboard and helped with serial communication, generated an impressive four channels (voices) of sound. Thus, the Atari 8-bit computers offered the best audio performance for years. A simple internal speaker similar to the one in the Apple II emitted clicks when a key on the keyboard was pressed. This speaker was sometimes used as a fifth voice.

The original graphics chip, the CTIA, was an improved version of the VCS's flexible TIA chip and was capable of an impressive range of color and resolution modes. In 1981, Atari upgraded the 400 and 800 with a new graphics chip, the GTIA, which was even more powerful. Both graphics chips worked with the ANTIC microprocessor to help balance the display workload for superior performance. This arrangement allowed for 12 different display mode combinations with the CTIA and 16 with the GTIA. All future Atari 8-bit systems would come standard with the GTIA.

Peripherals such as printers, cassette recorders, and disk drives attached to the SIO port and could be daisy-chained. Although easy for the end user and extremely versatile, this proprietary port required an adapter for use of third-party devices based on more typical industry standards.