How does a bit work?

Excuse me, I'm curious about how a bit actually works in the world of cryptocurrency. Could you please explain it to me in simple terms? I've heard it's a fundamental unit of data, but how does it specifically relate to the blockchain technology and the transactions that take place on it? Also, is there a limit to the number of bits that can be used in a transaction or is it infinite? I'm really trying to wrap my head around this concept, so any clarification would be greatly appreciated.