A bit is a single numeric value, either '1' or '0', that encodes a single unit of digital information. A byte is a sequence of bits; usually eight bits equal one byte.
For example, in Internet Protocol (IP) networking, IP addresses contain 32 bits or 4 bytes. The bits encode the network address so that it can be shared on the network. The bytes divide the bits into groups.
The IP address 192.168.0.1, for instance, is encoded with the following bits and bytes:
11000000 10101000 00000000 00000001