This term refers to the number of bits of information used to record the colors of a pixel. The higher the Bit Depth, the more accurate the colour representation, as well as the dynamic range of a sensor.

Comparitively:

 Bit Depth  Greyscale Levels Potential Dynamic Range
 8-bit  256 steps  48dB
 12-bit  4,096 steps  72dB
 14-bit  16,384 steps  84dB
 16-bit  65,536 steps  96dB

 

It’s easy to see that more “bits” gives you better colour, but the second advantage is better low light performance.

Please note that there are many more variables to considder (including operational heat, sensor heat, actual sensor charge, sensor “charge” time, etc)

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