As said, each bit (binary digit) has two states, "on" and "off", "1" and "0" or "high" (e.g. 3.3volts) and "low" (e.g. zero) voltage.

With four bits you can count from 0 to 15, with 8 bits, from 0 to 255 etc.

decimal binary

00 0000

01 0001

02 0010

03 0011

04 0100

05 0101

06 0110

07 0111

08 1000

09 1001

10 1010

11 1011

12 1100

13 1101

14 1110

15 1111

16 10000

etc

An you count in binary, the last (rightmost) bit alternatively toggles between 0 and 1, and each time a digit flips back to a zero from a one, the 'carry' is taken to the next bit to the left...

You can 'decode' binary by working from right to left, noting that the rightmost bit is worth 1, the next rightmost as 2, then 4, 8, 16, 32, 64, 128, 256, 512, 1024, 2048, 4096, 8192, 16384, 32768, 65536, 131072...

As well as for counting and data, you use binary "address busses" to access different locations in computer memory.

This is where a lot of the "funny" numbers you see in computers come from, why "1k" is usually 1024 bytes (2 to the power of 10) rather than 1000 bytes.

1 megabyte = 2^20 bytes = 1048576 bytes (the maximum you can address with 20 wires).