A digital device processes electronic signals that represent either a one (“on”) or a zero (“off”). The on state is represented by the presence of an electronic signal; the off state is represented by the absence of an electronic signal. Each one or zero is referred to as a bit (a contraction of binary digit); a group of eight bits is a byte. The first personal computers could process 8 bits of data at once; modern PCs can now process 64 bits of data at a time, which is where the term 64-bit processor comes from.
Sidebar: Understanding Binary
As you know, the system of numbering we are most familiar with is base-ten numbering. In base-ten numbering, each column in the number represents a power of ten, with the far-right column representing 10^0 (ones), the next column from the right representing 10^1 (tens), then 10^2 (hundreds), then 10^3 (thousands), etc. For example, the number 1010 in decimal represents: (1 x 1000) + (0 x 100) + (1 x 10) + (0 x 1).
Computers use the base-two numbering system, also known as binary. In this system, each column in the number represents a power of two, with the far-right column representing 2^0 (ones), the next column from the right representing 2^1 (tens), then 2^2 (fours), then 2^3 (eights), etc. For example, the number 1010 in binary represents (1 x 8 ) + (0 x 4) + (1 x 2) + (0 x 1). In base ten, this evaluates to 10.
As the capacities of digital devices grew, new terms were developed to identify the capacities of processors, memory, and disk storage space. Prefixes were applied to the word byte to represent different orders of magnitude. Since these are digital specifications, the prefixes were originally meant to represent multiples of 1024 (which is 210), but have more recently been rounded to mean multiples of 1000.