First, an overview:

The Middle Colonies are New Jersey, New York, Delaware, and Pennsylvania.  New York and New Jersey were ruled as royal colonies, and Delaware and Pennsylvania were ruled as proprietary colonies.  A royal colony was ruled directly by the English monarchy, and a proprietary colony was given to one or more people by the English crown but ruled by that proprietor.  William Penn was the proprietor of lands in Pennsylvania and Delaware.  

Regardless of whether the colonies were royal or proprietary, all colonies elected their own legislature, had a governor, and had a court system.   The governor of the New York and New Jersey royal colonies was elected by the King, and the governor of the Delaware and Pennsylvanian proprietary colonies chose their own governor and that governor was then reviewed by the King (the monarchy had to approve of the chosen governor).  

---

New York was founded by the Dutch and land was given to the Duke of York.  The governors were chosen by the Duke of York, and a council was created to help the governor with decision-making (the council was elected, meaning that colonists were able to give a small amount of input in the decision-making.)  The Duke of York gave some land to George Carteret and John Berkeley, and this became the New Jersey colony.  These two men lived in England and also chose their governors, who elected a council to help with decision-making (much like New York).  To reiterate, although colonists were chosen to represent in this council, they had little rights or representation in England.

William Penn was a Quaker from England who was given land in the New World.  The King owed the Penn family a lot of money, but instead of paying out his debts and perhaps to remove the Quakers from England (which was an Anglican-majority country), Penn was given a large plot of land instead.  This became the proprietary colony of Pennsylvania, where many people enjoyed religious tolerance and greater representation.  Pennsylvanian colonists could vote for their representatives who had the power to approve or reject laws, giving them more power than their New York or New Jersey counterparts.  Penn was also given a portion of land which later became the colony of Delaware.