Sensors consist of pixels with photodiodes which convert the energy of the incoming photons into an electrical charge. That electrical charge is converted to a voltage which is amplified to a level at which it can be processed further by the Analog to Digital Converter (ADC). The ADC classifies ("samples") the analog voltages of the pixels into a number of discrete levels of brightness and assigns each level a binary label consisting of zeros and ones. A "one bit" ADC would classify the pixel values as either black (0) or white (1). A "two bit" ADC would categorize them into four (2^2) groups: black (00), white (11), and two levels in between (01 and 10). Most consumer digital cameras use 8 bit ADCs, allowing up to 256 (2^8) distinct values for the brightness of a single pixel.

The minimum bit rate (resolution) of an ADC is determined by the dynamic range (accuracy) of the sensor. If the dynamic range of the sensor is for instance 1000:1 (also quoted as 60dB) the ADC should be at least 10 bit (2^10 = 1,024 discrete levels) in order to avoid loss of information. A 10 bit ADC is theoretically a perfect fit, and a 12 or 14 bit ADC will not generate additional tonal information other than noise. However, in practice it makes sense to overspecify the ADC to 12 bits to allow for some margin of error on the ADC.  It is also useful to have extra bits available to minimize posterization or banding when applying the tonal curve to the linear data.
Often, marketing material advertises the bit rate of the ADC to suggest the digital camera or scanner is able to output images with a high dynamic and tonal range. From the above it is easy to understand that this is only true IF the sensor itself has sufficient dynamic range. The tonal range and dynamic range can never be larger than the dynamic range of the sensor.

Digital SLR cameras have sensors with a higher dynamic range and are usually equipped with 10 or 12 bit ADCs. Normally such cameras offer the option to save the 10 or 12 bits of data per pixel in RAW because JPEG only allows 8 bits of data per channel.