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The term bit depth or colour depth refers to the range of colour available in an image.

The image below shows the possible scale of grays for different bit images.

The more bits you have the more shades of grey you can display.

To work out how many shades of gray you will have in an image you use the formula 2 to the power of. For example, an 8 bit image, 2 to the power of 8=256. Black, White and 254 shades of gray.

The table below shows the potential grayscale amount for each size image.

The third column in this table shows the available colour possibilities for the different bit size images. With the 3 channels of colour, Red, Green and Blue.

Red X Green X Blue = Available colour possibilities.

Banding is where you can see a abrupt changes between shades of the same colour. This happens on lower bit depth images.

For example, above you can see two photographs showing shades of the colour purple. The one on the left has a lower bit depth than the one on the right. You can see that the changes in the shades jump and form bands of colour. Whereas the one on the right that has a higher bit depth and shows a gradual change from dark purple to light, with no banding.