Bit depth
Bit depth defines how many different tones and colors a file can hold. An 8-bit JPEG has 256 shades per channel, a 16-bit file has millions more. When editing, a higher bit depth gives smoother transitions and less risk of banding.
Editing a RAW file with heavy adjustments to sky or skin, work in 16-bit to avoid color banding (visible steps in a gradient). Opening a file in Photoshop, choose 16 bits/channel instead of 8 for heavy curve and color work. Only at final export to JPEG do you drop back to 8-bit, which is plenty for screen. Higher bit depth does make files larger, so use it where it counts.
Read also the in-depth explanation: Bit depth explained.
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