From LQWiki
A byte on modern computers is a set of eight bits considered together to represent a quantity: using an unsigned integer encoding one can represent numbers 0 through to 255.
Older computers however had different sized bytes - such as six or nine bit bytes.
A letter or other character is also typically represented as a byte, and that is why eight bit bytes are common today. Earlier systems (such as teletypes) used a seven bit byte, which allowed for 128 distinct values. Take a look at the ASCII code to see the result of this history. The first 128 values are taken up with capital letters, small letters, numbers, punctuation characters and various control characters. The eight bit byte allows for a larger range of characters. Of course, nowadays we use two eight bit bytes (or more) to allow us to choose from 65536 possible values - see unicode.
Numbers are usually represented using several bytes together.
Historical Note
The term was coined by Werner Buchholz in 1956 during the early design phase for the IBM Stretch computer; originally it was described as 1 to 6 bits (typical I/O equipment of the period used 6-bit chunks of information). The move to an 8-bit byte happened in late 1956, and this size was later adopted and promulgated as a standard by the System/360. The word was coined by mutating the word ‘bite’ so it would not be accidentally misspelled as bit.
See also
This article is based, in whole or in part, on entry or entries in the Jargon File.

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