Substrate thickness
The degree of precision with which etching technology can lay down the masks and burn away the thus-defined residual material, ending up with a single layer of a multi-substrate circuit, constitutes a significant indication of the level of the capabilities (and limitations) of the processor. The thinner the workable substrate, the more tightly packed the circuit can be made, thus potentially leading to higher computational capabilities; "potentially", because thinner substrates and closer packing themselves give rise to problems that grow more powerful the farther these bounds are pushed -- chief among these problems are waste heat and interference, the latter being both electrical and magnetic in nature.
Only a few years ago the industry-standard for substrate construction was 1.2 microns, or 1.2 x 10-6 meters; now the standard is 0.8 microns, and experimental circuits are being constructed at 0.5, 0.3, and 0.1 micron levels.
Transistor packing
Closely associated with substrate thickness is the miniturization of transistors, the workhorses of the processor. The smaller transistors can be shrunk, the more of them can be crowded onto a circuit board, and the more processing power can be obtained from the same footprint. But, again, the more tightly these electro-magnetic devices are packed, the more heat has to be dissipated from their joint operation, and this has direct implications for both internal cooling (i.e., heat sinks) and external cooling (i.e., liquid nitrogen, forced refrigeration, forced air).
Current processors top 1 million transistors per chip.