A bit is short for a binary digit. In a binary system, only two digits exist: 1 and 0, as opposed to the decimal system, which has 10 digits from 0 to 9. The binary system was adapted in computers because data can simply be represented in 1's and 0's and it can easily be converted to represent electrical signals with 0 considered as an "off state" and 1 as an "on state." One byte is equivalent to 8 bits.
Differentiating Number Systems

Four major number systems are in general use. The one we use commonly is the decimal system, which has 10 digits. Another is the octal system, which has eight digits that go from 0 to 7. The hexadecimal system has 16 digits and goes from 0 to 9, then A to E. The last one is the binary system, which has 0 and 1. The binary system is in base 2, which when converted to the decimal system is 2 raised to the nth power; this is important in understanding storage sizes in computers.
Using Binary in Computers

The binary system was used in computers because it provides the easiest way of converting digital signals to electrical signals and vice versa. This allows hardware devices and software applications to interact with each other. Letters, numbers and other symbols can be translated into binary representations, which the hardware can then read and transmit through physical devices such as wires and cables.
Bits and Bytes

You might wonder why 8 bits or a byte is used instead of something else. This is because the earliest computers could process only 8 bits of data at a time. As computers became faster and more advanced, the idea of a byte stuck. A single byte of data can be from 00000000 to 11111111, which when converted to decimal goes from 0 to 255. In computer symbols, a bit is represented with a lowercase letter "b" while a byte is represented with an uppercase letter "B."
Understanding Computer Measurements

Hard disk spaces, file and memory sizes are often measured in kilobytes, megabytes and gigabytes. A kilobyte is not exactly 1,000 bytes. Recall that when converting bits to decimal numbers, it's 2 raised to the nth power. A kilobyte is actually 1,024 bytes, which is 2 to the 10th power. Similarly, 1MB is not a million bytes but 1,048,576 bytes, or 2 to the 20th power. One gigabyte is not exactly one billion bytes, but 1,073,741,824, or 2 to the 30th power.