Here it is in simple terms:
In a regular CRT monitor, there are 3 light 'guns' that each shoot a primary color [red, green, blue]. The combination of these colors, with different amounts of each color, produce all colors out there.
There is a extremely thin LCD mesh/panel inside the monitor that have tiny LCDs that are Red, Green, and Blue. These are lit up according to the color of the pixel needed. When you touch the monitor, it is making the weird effects because you are warping the mesh.
At least I think that is how LCD monitors work...