OC An explanation of "bit depth" and what you should use!

If we ignore "32-bit" mode in Photoshop for now, the "bit depth" is simply how many bits are used to store the color values.

The image consists of three color channels, and the "bits" given by Photoshop is per channel (to get the number of bits per pixel you'd need to multiply by the number of color channels, and that can vary).

So let's look at a grayscale image (or just one channel) for simplicity:

At 8 bits we have just enough color values to get a smooth-looking gradient in many situations. Any higher and we might not get any visual improvement, while just increasing file size and required processing power. This is why regular images (for viewing/printing) are almost always 8 bit.

Notice how you can't really see the difference between the 8-bit and 16-bit example? The 16-bit file is twice the amount of data (before compression).

So why bother with 16-bit then? Well, sometimes you want to actually edit/adjust your images. And you notice that especially in areas of smooth gradients, or when doing more extreme changes to color/brightness/contrast, or when stacking multiple effects, you run into "banding". Here's an example:

Look at this very dark gradient (from black to dark grey) – looks pretty much the same in 8-bit and 16-bit (note; displays are usually 8 or 10 bits, so for viewing you might see slight banding in the 16-bit version that isn't actually in the image file).

Here is what happens when I brighten the gradient. It is clear that the 8-bit version didn't have enough "steps" in it to differentiate all those almost-identical shades of gray. This type of quality problem is called "banding" (due to the visible bands in smooth gradients).

So, in short, by editing in 16-bit mode you have more color values. Lots more of them. So you can avoid banding and similar issues while editing. The downside is a lot heavier files (might be slow to work on, and originals take up more disk space). So a lot of people edit in 8-bit for most things; and only switch to 16-bit for more important stuff when they expect heavy editing or problematic gradients/banding.

Finally we have "32-bit" in Photoshop. This is actually not just a bit-depth increase, but HDR mode. It's just poorly labelled on the menu so it's not clear. I won't dig into the details of what HDR is, but in short, unless you know you need HDR, don't work in 32-bit mode. ;)

Ps: "Dithering" is typically used to cover up banding in 8-bit files. A topic for another time... :)

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