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I do not understand the meaning of 8 bit, 16 bit, 32 etc, 256 bit etc Please explain to me how this works in computing

I do not understand the meaning of 8 bit, 16 bit, 32 etc, 256 bit etc Please explain to me how this works in computing with possible examples. Are there limited number of letters or numbers we can use with 8 bit, 16 bit etc?

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