In his book THE BLACK HOLE WAR, 2008, Leonard Susskind makes the following comments around page 135-137:

In the following he happens to be referring to a Planck scale cube...let's ignore that specific geometric shape....

(Later in the book of course he describes his holographic principle where bits are displayed on the surface area representing information in an enclosed volume...I don't care for the moment what shape you'd prefer.)

My question is whether the boldface is a bit of an overstatement: It seems like if some fundamental discrete scale is either required for a bit or is actually "created" by a bit...it can only be on or off...one of either two states....so I don't see how, for example, one bit in one fundamental scale entity could represent vacuum, a passing electromagnetic wave and/or a passing gravitational wave, let alone different matters....you can't represent all those things via a single bit....
or am I missing something....?? Can a fundamental unit vacuum entity in theory contain a bit....if information is made of matter?? Is there some area of physics that explains how quantum foam and uncertainty still enables a bit to be retained at the planck scale??
I'm getting a headache....

I haven't read the book and I have not read enough about Susskind to have the slightest clue about the general traits of his reasoning, but just from my own personal perspective (associating to the topic) I see it a bit like this:

Can you encode the diversity of interactions in some hypothetical bit? No.

The information complexity constrains the disinguishably symmetries, but this is IMO a possible key to unification. You can pose what happens if you consider complexity increasing, bit by bit, and how interaction are distinguished during this scaling. During this scaling I also think that at some point the effective continuunm is born.

IMO the interesting thing about this stuff (information and matter and bits - not referring to the book though because I haven't read it) is that if we can understand how the state of the bit systems take on preferred states as the complexity increases, we might also get a deeper insight into the hiearchy of physical interactions.

The process wherby bits are created is I think realted to the origin of mass, and I see it as an evolutionary process, where a self organisation takes place. One can imagine how uncertainty grows into certainty, and an uncertain bit with ultimately is just noise, gradually gets more certain, but you need existing bits to seed it, because the only uncertainty measures at hand are in the existing bits. I even belive this might contain the secret of gravity as a kind of growth of more bits by making speculative bits, eventually form more certain bits [this is loosely how I envision it]. Ie. bits are created, but need previous bits to seed it. Think like investing taking risks, you can make money by speculation, but you need money for a stake.

Of course byt the very same mechanism you can destroy bits.

But a completele model for this that is satisfactory seems still lacking. Perhaps he is trying to convey a vision, which is certainly a good first step, because it may give people hints and ideas. I for one think the information theoretic angles are of far deeper interest than more concrete but way too speculative, swinging spaghetti type models.

It's interesting though, that even if you start with spaghetti, reasoning seems to lead to more interesting thinking, of apparently more general validity.

(Fwiw, I highlighted what I think are hte main trains of thought in my comment, since my posts always tend to get unstructured)

He's talking about a qbit. The fundamental unit of information in quantum mechanics. In quantum gravity its encoded in a D-1 boundary theory in the case of black holes.

qbits are interesting objects, they carry discrete state information, as well as a continous phase information (something like exp (itheta)).

If you know everything there is to know about the qbits of a system, you have specified it completely, or as completely as quantum mechanics allows to whatever desired accuracy you need. Its completely analogous to the classical case where you know everything about say the temperature field in the room by specifying all the numbers of each point in the field as bits.

Another way of putting it is that the context asks the question and the location supplies the answer. And a sufficiently simple question can have a sufficiently simple answer.

Q: So tell me, oh smallest measurable point in spacetime, are you spin up or spin down?

A: Well I was fuzzy, foamy and entangled. Now your question has decohered me to some crisp definite state.

The information theoretic approach models things more simply of course by discarding the information bound up in the questioning. Only the world's ability to yield localised answers is treated as fundamental.