So you are saying, in 16 bit, there are more colors to choose from and the conversion to 8 bit chooses those colors. Whereas in an 8 bit original, there are fewer colors to choose from? If that is right, then I now understand.
16-bit has the
potential to display more colors than 8-bit.
Post process RGB color pallets only offer 256 (8-bit) choices per color channel to choose from even if you are editing a 16-bit image. They usually also offer an HSL pallet too. (Hue, Saturation, Luminosity)
In 12-bit depth, there can be 16 additional shades of color per color channel between each 8-bit shade.
In 14-bit depth, there can be 64 additional shades of color per color channel between each 8-bit shade.
Any of those 16 or 64 in between colors that existed in the original get lost in the conversion to 8-bit. In most images the loss is undetectable. As I mentioned before the loss can become detectable in gradients as banding or posterization where 256 colors per channel is not enough to smoothly reproduce the gradient.
Image Posterization
In 8-bit, pure red is r=256, g=0, b=0. The next shade of red in 8-bit is r=255, g=0, b=0.
In 12-bit there can be 16 additional shades of red between those 2 shades of 8-bit red, and 64 additional shades in 14-bit.
It might be helpful to backup to where it all starts - the image sensor in the camera - and consider what the image sensor does.
The image sensor in a digital camera is color blind, and is incapable of recording color. Each pixel on the image sensor develops an analog voltage proportional to how much light (how many photons) hit the pixel during the time the shutter was open.
Active pixel sensor - Wikipedia, the free encyclopedia
Color has to be inferred (interpolated). Most digital camera have a Bayer Array filter in front of the image sensor. The arrangement of the red, green and blue elements of the Bayer Array are used by the algorithms that
interpolate what color of light any one image sensor probably recorded.
Bayer filter - Wikipedia, the free encyclopedia
To decide what color should be assigned to any single pixel, the color interpolation algorithm considers the Bayer Array pattern and voltage level of adjacent pixels.
The pipeline from the image sensor to a photo that looks like what we see involves quite a bit of software manipulation, including Raw files.
Raw converters not only interpolate color, they also demosaic, apply a gamma curve, tone-map, and anti-alias before you see the photo and can then apply your own edits.
To make a TIFF (16-bit or 8-bit), or a JPEG even more is done to the photo before it is available to the photographer for additional editing.