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16-Bit Refers to the number of bits that can be processed or transmitted in parallel, or the number of bits used for single element in a data format. The term is often applied to the following:

• microprocessor: indicates the width of the registers. A 16-bit microprocessor can process data and memory addresses that are represented by 16 bits.\
• bus : indicates the number of wires in the bus. A 16-bit bus transmits 16 bits in parallel.
• graphics device, such as a scanner or digital camera : specifies the number of bits used to represent each pixel.
• operating system: refers primarily to the number of bits used to represent memory addresses. Windows 3.x is a 16-bit operating system, whereas Windows 95 and Windows NT are 32-Bit operating systems.
• expansion board: refers to how much data can be sent to and from the card in parallel. 8-bit cards are sometimes called half-size cards whereas 16-bit cards are referred to as full-size cards.

Source: 16-Bit