The discussion centers around the concept of a byte, clarifying that one byte consists of 8 bits, with 7 bits typically used for data and the 8th bit sometimes allocated for parity or as an extension of the ASCII standard. The original ASCII code utilized 7 bits to represent 128 characters, which was later expanded to 256 characters with the introduction of the 8-bit byte. Participants reminisce about the evolution of character encoding, referencing earlier 6-bit codes and the historical context of byte definitions, particularly IBM's establishment of the 8-bit byte with the introduction of the IBM 360 series. The conversation also includes light-hearted banter about age and nostalgia for earlier computing eras, with mentions of various coding systems and their bit structures, such as EBCDIC and UTF-8.