Let's look at Arduino in more electrical detail. The diagram below shows how we will connect things to Arduino and what it means if something is connected or switched to HIGH=5V or LOW=0.0V :
When a PIN (or wire or connection) changes from 0 to 1, or 1 to 0, we say it is a SIGNAL. Kind of like someone raising up a flag or lowering it.
DIGITAL OUTPUT "SIGNALS": An LED or Buzzer connected to an Arduino OUTPUT can "signal" you that something has happened.
DIGITAL INPUT SIGNALS: If you push a button that changes an INPUT, you "signal" Arduino that something should be done.
Oh, um.. what's a BIT anyway? It is a Binary InTeger which is a number which has only two possible values: 0 and 1. Each YourDuino Input or Output PIN is one BIT inside Yourduino. (A GROUP of 8 BITS is called a BYTE. Bet you knew that!).