When converting RAW files there is a choice of bit depth to make.

8 bit files have 255 shades of each Red, Green, and Blue.
16 bit files have 65,536 shades of each Red, Green, and Blue.

Most digital camera RAW files is a 12 bit file so if you use 8 bit you will lose some color information. If you use 16 bit you have more then you need. Depending on what your taking pictures of you may or may not notice the difference between the two.

I tend to use 16 bit files when I'm doing print work that I deem important. If I'm just processing images for the web I use 8 bit, because you can't use 16 bit images on the web anyways.

When you use 16 but images you are really limited in the file formats you can save the image in.