I searched and looked around a bit about this part in MCU circuit. I know that it charges for maintaining constant flow for MCU which has varying power consumption. I also know some ppl just place a standard 104-capacitor here.

How can I calculate which size of bypass capacitor I need on the MCU circuit?

Also, does these same things apply if I make circuits for something that's capable of running an operating system inside?

Cheery, a good rule of thumb is - the more power your system may consume, the bigger capacitor should be used.

Having an operating system or not isn't really a factor, since theoretically you can run an operating system on a nerdkit. However, more likely you'd need extra memory, which in turn would consume a little more power then the standard nerdkit.

Also, increasing the capacitor value won't always solve your problem. For example, I did a 16x16 color LED matrix that was controlled by a nerdkit. The matrix required so much power that the 9v battery provided couldn't handle such load, so I had to use a more powerful source of power.

That was a fast response.

So the amount and size of the capacitors depend on how large currency goes through the circuit. So more components require more capacitors.

If there's not clear instructions on picking right amount of capacitance.. How do I recognise that the chip requires larger capacitors before it?

You would choose a bypass capacitor value based on the frequency to be filtered. Here is a handy chart from page 4 of this document.

The document you pasted tells quite a lot more about this component and its purpose. These bypass capacitors behave exactly like an analog frequency filters I see.. The power source isn't entirely flat, but indeed can cause voltage ripples which can fry my parts.

Thank you. :) This part makes sense now.

I have seen it suggested that the filter capacitors be staged.

.01 uf
.1 uf
4.7uf
47uf

with the .01 closest to the mcu. The upper values are arbitrary determined by your circuit and needs.

Ralph