A bit is short for “binary digit.” It is basically how a computer stores and makes references to data, memory, etc. A bit can have a value of 1 or 0, that’s it. So binary code is streams of 1’s and 0’s, such as this random sequence 100100100111. These bits are also how your processor does calculations. By using 32 bits your processor can represent numbers from 0 to 4,294,967,295 while a 64-bit machine can represent numbers from 0 to 18,446,744,073,709,551,615. Obviously this means your computer can do math with larger numbers, and be more efficient with smaller numbers.
The true benefits of this set up don’t come from the amount of bits, but by the improved structure of the 64 bit vs 32 bit processor's older structure. A 64-bit processor is made with more advanced silicon processes, have more transistors, and faster speeds. This is currently where the true benefit of switching to a 64-bit processor lays.
The code optimized for 64 bits is executed much faster, but the SSE 2 optimized one is constant. 3D applications don’t benefit from the migration from 32 bit to 64 bit, probably because of the GPU. The 64 bit video drivers didn’t improve significantly the performance, but didn’t decrease it either.
In this moment, Windows XP 64 bits is not an option for AMD 64 owners. The incompatibility with 32 bit programs is one of the problems of Windows XP 64 bits. For programmers things are different, the compiling of the programs being done much faster.
The optimization for 64 bits is clearly a step forward, but momentarily, the only benefit you can obtain by installing this operating system is the possibility of administering more than 4 GB of RAM.
As long as there isn’t a wide range of 64 bit applications, migrating from Windows x32 to Windows x64 is not yet justified, the complications regarding drivers and incompatibility being major disadvantages.