Understanding Storing Bitcoin and wallets I bought some bitcoin and have them saved on my PC on a MultiBit wallet.

I am a little confused as to how they are actually stored.

Are the bitcoins tied to my machine? So if I lose my PC the bitcoins are gone forever.

Or if I download the same multibit wallet on another computer can I enter my password and access my bitcoins from that machine?

Also what is a paper wallet?

And final question..... I have read Multibits policy on restoring wallet and the use of wallet words.  Are wallet words used by all types of wallets or is that just a Multibit specific security measure.

All simplified and intuitive answers will be of benefit as more people are starting to become aware of bitcoin and are probably thinking and asking the same things.

Thanks in advance
Welcome to the world of Bitcoin. One hint at the beginning: you raised too many questions at once, usually people here try to limit to one question, and answer it "accordingly". That makes it easier to follow up. Anyhow:

Bitcoins are not stored in a way you would have money in a wallet. The concept of Bitcoin circles around cryptographic keys (private and public keys). These keys are used to create and validate transactions, which transfer bitcoins from an address A to an address B, all noted down in the blockchain. 
Your wallet is an abstraction layer, so that you don't have to work with these cryptographic keys. And every wallet has it's own idea on implementation, though there are some common rules. One of the major rules is: as long as you have the private key (on floppy, USB disk, or noted down on a paper), you are quite independant of any wallet. 

Now on Multibit: if your PC crashes, your bitcoins must not be lost. You can make backups, and re-install on a new PC. Multibit has some info on the support pages on how to secure your wallet, by making backups and restores. Better read it carefully, and give it a try on a test machine  :-)
The more precise answer is: if you lose you private key (which is linked to the words of the multibit wallet), then and only then the bitcoins have very, very low probability to be somehow recoverd (all your bitcoins are lost).

On paper wallet: generally a paper wallet is a private key or words derived from the private key noted on a paper, so they can be used at a later stage to recreate a wallet (eventually with all its funds). There is a tag in stackexchange for paper wallet: https://bitcoin.stackexchange.com/questions/tagged/paper-wallet
you may find what it is, or do some web research. It has been answered before. 

On Multibits use of words: it is not necessarily working in other wallets. It may work, or may not work. I haven't seen someone doing all the combinations - obviously already too many wallets out there! 

My hints to all newcomers in rypto world: do some further research, e.g.:
1. the book „Mastering Bitcoin“, in many languages, by Andreas M. Antonopoulos. 
2. „www.bitcoin.org“, with a description of the whole eco system, also in many languages.