A byte is a set of bits that are stored and operated upon as a unit. A byte may have a coded value equal to a character in the ASCII code (letters, numbers) or have some other value meaningful to the computer. The term usually refers to 8-bit units or characters.
The term was introduced by Werner Buchholz (a scientist from IBM) in 1956.
Prefixes are used to make the notation of a large number of bytes easier. Because bytes are made up using the binary (base two) number system, their multiples must also be powers of two. Therefore, the prefixes have a slightly different meaning as their analogue counterparts.
A byte is usually abbreviated by a uppercase B, to differente from the abbreviation for a single bit, which is a lower case b.