You have hundreds of bursa all over your body which can be thought of as little bags of oil that help reduce friction between two joints moving in opposite directions as well as where muscles & tendons slide over bone.
The knee joint forms at the intersection of four bones, the femur (your thigh bone), the tibia and fibula (the two bones of your lower leg) and the patella, (your kneecap) which slidesover the top of the joint as you bend your knee.