Q:

Why do bytes exist? Why don't we just use bits?

A byte consists of 8 bits on most systems.
A byte typically represents the smallest data type a programmer may use. Depending on language, the data types might be called char or byte.
There are some types of data (booleans, small integers, etc) that could be stored in fewer bits than a byte. Yet using less than a byte is not supported by any programming language I know of (natively).
Why does this minimum of using 8 bits to store data exist? Why do we even need bytes? Why don't computers just use increments of bits (1 or more bits) rather than increments of bytes (multiples of 8 bits)?
Just in case anyone asks: I'm not worried about it. I do not have any specific needs. I'm just curious.

A:

because at the hardware level memory is naturally organized into addressable chunks. Small chunks means that you can have fine grained things like 4 bit numbers; large chunks allow for more efficient operation (typically a CPU moves things around in 'chunks' or multiple thereof). IN particular larger addressable chunks make for bigger address spaces. If I have chunks that are 1 bit then an address range of 1 - 500 only covers 500 bits whereas 500 8 bit chunks cover 4000 bits.
Note - it was not always 8 bits. I worked on a machine that thought in 6 bits. (good old octal)

A:

Paper tape (~1950's) was 5 or 6 holes (bits) wide, maybe other widths.
Punched cards (the newer kind) were 12 rows of 80 columns.
1960s:
B-5000 - 48-bit "words" with 6-bit characters
CDC-6600 -- 60-bit words with 6-bit characters
IBM 7090 -- 36-bit words with 6-bit characters
There were 12-bit machines; etc.  
1970-1980s, "micros" enter the picture:
Intel 4004 - 4-bit chunks
8008, 8086, Z80, 6502, etc - 8 bit chunks
68000 - 16-bit words, but still 8-bit bytes
486 - 32-bit words, but still 8-bit bytes
today - 64-bit words, but still 8-bit bytes
future - 128, etc, but still 8-bit bytes
Get the picture?  Americans figured that characters could be stored in only 6 bits.
Then we discovered that there was more in the world than just English.
So we foundered around with 7-bit ascii and 8-bit EBCDIC.  
Eventually we decided that 8 bits was good enough for all the characters we would ever need.  ("We" were not Chinese.)
The IBM-360 came out as the dominant machine in the '60s-70's; it was based on an 8-bit byte.  (It sort of had 32-bit words, but that became less important than the all-mighty byte.
It seemed such a waste to use 8 bits when all you really needed 7 bits to store all the characters you ever needed.
IBM, in the mid-20th century "owned" the computer marked with 70% of the hardware and software sales.  With the 360 being their main machine, 8-bit bytes was the thing for all the competitors to copy.
Eventually we realized that other languages existed and came up with Unicode/utf8 and its variants.  But that's another story.

