Binary numbers use only the digits 0 and 1 to represent values. Other numbering systems discussed include octal (base 8) and hexadecimal (base 16). Octal groups binary numbers into sets of 3 digits, while hexadecimal uses groups of 4 binary digits. Conversion between binary, octal, and hexadecimal is demonstrated through examples. Binary addition and subtraction are conceptually similar to decimal but use only 1s and 0s. Two's complement representation is commonly used in microprocessors to represent both positive and negative numbers.