Put in the simplest terms possible, as you know, digital images are made up of three color channels: Red, Green, and Blue. All of the colors and tones in your image are made up of various gradations and mixtures of those three colors. The bit depth you choose to work with determines how many color gradations are available to each color.
8-bit color gives you access to 16.7 million colors, while 16-bit gives you access to 281 trillion colors. But just for the record, the human eye can’t even detect the color variance provided by 8-bit color. So now you may be asking yourself what the point is in using 16-bit color if our eyes can’t even tell the difference in the colors?
Well, simply put, bit depth affects more than just the colors available in your image. It also greatly affects how smooth the various gradations in the color of your image look. In an 8-bit image you may get more banding and artifacts in large areas of color gradation (like a blue sky or dark shadowy area), while with 16-bit those gradations remain smooth.
This video from Canon does a decent job of explaining the basics.
But you can’t just switch from 8 to 16-bit color and magically get all these new colors available to you. Your camera has to have captured the image you are processing with those additional colors or the point in processing with a higher bit depth is non-sensical. Most cameras don’t offer even RAW capture at 16-bit these days (12-bit or 14-bit is the most common) but some lower end or older models may only capture 8-bit or 10-bit. If you are curious about your camera and the color depth of its RAW files you can usually find that with a quick Google search or through the manufacturer’s specifications on their website.
We recommend looking into it. It’s good to know what you are working with. But to answer the question posed in our title – yes, color bit depth does matter, and more is better. But only to the point at which your image was captured.