In 2's complement representation with 4 bits, the range of numbers is from -8 to +7, rather than 0 to 15, because the system allocates half of the values for negative numbers. With 4 bits, a total of 16 different values can be represented, but 2's complement uses the highest bit as a sign bit, limiting the positive range. This means that while unsigned representation can show values from 0 to 15, 2's complement focuses on balancing positive and negative values. The confusion arises from misunderstanding the difference between unsigned magnitude and signed representation. Understanding this distinction clarifies why the range is limited in 2's complement.