Bit is the smallest unit of information in a computer. Multiple bits can represent more complex data through binary encoding. Programmers must consider how many bits are needed to store each data item efficiently. Most computers handle bits in bytes, which are 8-bit chunks. A byte can store one of 256 possible values. Higher-level data types like integers are usually stored across multiple bytes, with the most significant byte first or last depending on the endianness of the architecture.