As Pommie explained.
Basically with a byte (8 bits) you can count from 0 to 255. But what if you want to count more, simple add more bits.
To keep things clean, you would add another 8 bits, and any multiples of that as you need more. Have a look at the history of the PC, you'll even find it there.
The problem is, an mcu is not a 64 bit device like your modern cpu.
So you are required to split up your large number to fit into two bytes.
The low byte and high byte, together giving you 16 bits, but they are separate, remember.
So what it means is that your mcu is only an eight bit device, so the internal registers are 8 bit, and therefore can only handle eight bit calculations etc.