How Digital Recording Works (Sort Of)
Basically, whenever you go from analog to digital, you're encoding the real world into separate pieces called bits. If you had only 1 bit, the sound would be either at maximum volume or zero...not too useful. Adding more bits gives you more refinement of detail and dynamic range (the difference between the loudest and softest material). So with 24 bits, you get more than with 16. In case you're not up on powers of 2, 16 bits gives you 65,536 levels and 24 bits gives you 16,777,216. Quite a bit more (all together now: groan!), but don't forget that all audio CDs are recorded at 16 bits and they sound pretty good.
Why does it improve things to record in 24 bits if your final output is only 16? Pretty much the same reason we found that mixing down from a cassette multitrack to a VCR is better than going to cassette directly. If you record "up", to a medium with better resolution, you lose less on the way to the end product.
It's almost like (and I don't know if you're old enough to remember this, maybe I'm giving away a little too much here :-) in the early days of consumer-oriented solid-state radio-frequency receiving equipment (OK, I'm trying to say "transistor radios"), unscrupulous manufacturers would advertise cheap radios having insane numbers of transistors, like 16 or 24 in a little handheld radio (why do those numbers sound so familiar all of a sudden? :-).
The idea was that Joe Consumer would think that a 24-transistor radio would be "more powerful" or "cooler" or "sound better" than a crummy old 6-transistor radio, which is what most of them had in those days. What all us hardware hackers knew (software hadn't been invented yet) from reading the schematics was that these extra transistors were there, but had all their leads wired together so they were doing absolutely nothing in the circuitry whatsoever!
At one point in the recent past, maybe only 9 months ago, it was true that virtually no software supported 24 bits so the lack of available software might have been an issue. Now it's just whether you're using it or not.
The main point is, the whole thing is similar to the analog-vs.-digital dichotomy. If you're working in digital, the second you drop out to analog, you never get that all-digital sound back (this can be a good or a bad thing, by the way). And if you're working in 24 bits, as soon as you go to a 16-bit only program, you lose the extra precision. You'll have to do that when you go to CD, though, no matter what, where everything is "just" 16-bit precision. But take heart...DVD audio is just around the corner!
So, the longer (in the recording/mixing process) you stay at 24 bits, the better it will sound. So 24 bit resolution on a sound card, if the software doesn't support it, is kind of lost right away...
If you have 24 bits, you always have more potential dynamic range on
the card itself, so more headroom for those occasional loud peaks. Don't
muck all this up by using a Radio Shack mic, that's all.