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, which affects the system's performance and memory addressing capabilities. Typically, these systems can access up to 65,536 memory addresses, allowing for a maximum of 64 KB of RAM. Common examples of 16-bit systems include early personal computers like the IBM PC/AT and gaming consoles such as the Super Nintendo Entertainment System (SNES). These systems were popular in the 1980s and early 1990s, providing a foundation for the development of more advanced 32-bit and 64-bit architectures.