A 16-bit system refers to a computer architecture that processes data in 16-bit chunks. This means that the CPU can handle 16 bits of data at a time, allowing for a larger range of values compared to 8-bit systems. Commonly used in the 1980s and early 1990s, 16-bit systems supported more memory and offered improved performance for applications and games. Examples of 16-bit systems include the Intel 8086 microprocessor and the Sega Genesis gaming console. These systems were significant in the evolution of computing, paving the way for more advanced architectures, such as 32-bit and 64-bit systems, which further enhanced processing capabilities.