Bits are the smallest possible unit in computing - they represent just a 0 or 1. 8 bits together represent a byte. 1 byte can store a single character such as "a" or even "$".
Our counting system is based on base 10 - we use digits 0 to 9 to represent our numbers. But computers use the binary system in their bits. Binary system means the base 2 system - digits 0 to 1 are used. Hexadecimal is base 16 (the prefix hexa- means 6, the prefix dec- means 10) which uses 0-9, as well as letters A-F, to represent 10-15. So A = 10, B = 11, C = 12, D = 13, E = 14, and F = 15. Octal (base 8) uses digits 0-7.