The document explains how computers use binary code to process information. It discusses how bits store either 1s or 0s to represent data as on or off signals. Eight bits are grouped together to form a byte, which can have one of 256 possible combinations of 1s and 0s. This binary code allows computers to interpret keyboard inputs and display letters on screens. Memory and storage capacities are measured in bytes, kilobytes, megabytes and gigabytes based on groups of bits and bytes.