Most cameras will let you save files in 8-bits (JPG) or 12 to 16-bits (RAW). So why doesn’t Photoshop open a 12 or 14-bit RAW file as 12 or 14 bits? For one, it would be a lot of work to develop both Photoshop and file formats to support other bit depths. And opening a 12-bit file as 16-bits is really no different than opening an 8-bit JPG and then converting to 16-bits. There is no immediate visual difference. But most importantly, there are huge benefits to using a file format with a few extra bits (as we’ll discuss later).
I’d almost say there is no banding at 9-bits
For displays, the terminology changes. In other words, “24-bits” (aka “True Color”) for a monitor isn’t super impressive, it actually means the same thing as 8-bits for Photoshop. A better option would be “30-48 bits” (aka “Deep Color”), which is 10-16 bits/channel -with anything over 10 bits/channel being overkill for display in my opinion.
With a clean gradient (ie, worst case conditions), I can personally detect banding in a 9-bit gradient (which is 2,048 shades of gray) on both my 2018 MacBook Pro Retina display and my 10-bit Eizo monitor. A 9-bit gradient is extremely faint (barely detectable) on both displays. I would almost certainly miss it if I weren’t looking for it. And even when I am looking for it, I cannot easily tell exactly where the edges are in comparison to a 10-bit gradient. An 8-bit gradient is relatively easy to see when looking for it, though I might still potentially miss it if I weren’t paying attention. So, for my purposes, a 10-bit gradient is visually identical to 14-bits or more.
How did I test that? To give a little more detail on my methods, I created an image that is 16,384 pixels wide – which allows me exactly 1 pixel for every value in a 14-bit gradient. I created a software algorithm to generate my gradients in every bit depth from 1 to 14 on the image. I would gladly share the original PSB file, but it is over 20GB. Instead, I’ve posted a full-resolution JPEG2000 image (ie 16-bit; I do not see any differences between it and the original detail, even when processing it with extreme curves). Amazing how that JPEG2000 file shrinks down
Note that if you want to create your own file in Photoshop, the gradient tool will create 8-bit gradients in 8-bit document mode (you can then convert the document to 16-bit mode and will still have an 8-bit gradient for testing/comparison). Photoshop’s gradient tool will create 12-bit gradients in 16-bit document mode. There is no 16-bit option for the gradient tool in Photoshop, it is a 12-bit tool internally (but 12-bits is more than enough for any practical work, as it allows for 4096 values).
Monitor vendors want to make their equipment sound sexy, so they typically refer to displays with 8-bits/channel as “24-bit” (because you have 3 channels with 8-bits each, which can be used to create roughly 16MM colors)
Be sure to enable/disable dithering in the gradient toolbar as best for your testing. And if you convert color spaces, sugar daddy meet be aware that there is a dithering option for 8-bit images under Edit / Color Settings / Conversion Options. Using dithering will often reduce the appearance of banding if your bands are close to 1 pixel wide (ie, dithering won’t hide bands in documents above a certain resolution; a Nikon D850 file is almost twice as wide as you would need to display every value in a 12-bit gradient).