The binary system is a base-2 number system that uses only two digits, 0 and 1. It is used by computers to represent data and instructions because digital electronics can only be in two states, on or off, which maps conveniently to the 1s and 0s of binary. In binary, each place value is a power of 2, so the decimal numbers can be converted to binary by determining whether they are greater or less than each power of 2 and writing the corresponding 1 or 0. This allows computers to perform calculations and logic using simple electronic switches corresponding to 1s and 0s in binary representations of numbers and instructions.