Clarification on the Keras Recurrent Unit Cell
The notation used for LSTM is quite confusing, and this took me some time to get my head around this as well. When you see this graphic (often used to explain RNNs):



You need to consider that X is a sequence of data the timestep t, it's not just a single scalar input value (as we're used to with feed-forward networks); it's an array / tensor of data. The diagram shows how there is an output at time-step t, but that it then also feeds into the next time-step, t+1, when the next array/tensor is then fed in.

A better/clearer way (in my opinion) is to look at it is like this:



So a LSTM 'cell' is actually what you might consider a layer. And a unit (one of the circles) is one of these:



which you can consider a neuron in a hidden layer.

Initially, I thought this was a cell, but it isn't, it's a single unit. So when you specify 32 units, for example, you're actually saying how many of these units (neurons) you want in the cell (layer).

This is what gives the model its capacity to learn the data that's presented to it. And just like hidden layers/neurons in a feed-forward, it's a hyperparameter that you'll need to experiment with; too low and the model will under-fit, too high and it will over-fit.