Bit depth is how many distinct shades each colour component in a pixel can take. 8-bit video stores 256 levels of red, 256 of green, 256 of blue per pixel — that's about 16.7 million possible colours. 10-bit stores 1024 levels per component, giving over a billion colours. 12-bit stores 4096 levels, or ~68 billion colours. More levels means smoother gradients, finer shading, and the room to represent HDR signals correctly.
Why this matters in practice: a clear sunset sky, a foggy morning, a smooth wall lit by a single light — these look fine in real life but reveal an 8-bit signal's coarseness as visible "stair-stepped" bands across the gradient. 10-bit removes the stair-stepping. For SDR content, 8-bit is still acceptable; for HDR (HDR10, Dolby Vision, HLG), 10-bit is mandatory because HDR's wider brightness and colour ranges would otherwise produce extreme banding.
A counter-intuitive bonus: in HEVC and AV1, encoding at 10-bit often produces a smaller file at the same visual quality than 8-bit — by about 5–15 %. The finer levels let the encoder make better rounding decisions during compression. So even for SDR delivery, 10-bit can be a quality and bandwidth win, with the only downside being slightly heavier decoding on older hardware.
