You are correct, 4 bits = a nibble, the old way was 4 switches, 4 neon glow tube indicator bulbs and a push button, you set your switches to the first nibble (glow light off equals a logic zero, glow light on=a logic 1) hit the push button and the relays trigger the paper punches to poke out the holes in the paper tape, you reset your switches to the next code a hit the switch, once done you re-wind the paper tape and feed it into the machine, a light on one side of the tape and 4 photo detectors on the other side followed the instructions, (move tool head right, left, up, down, ect) thus the machine using it did what it was told,. (birth of machine code)
When the photo detectors became smaller the code could become 8 bits per line, the machine involved could do more, this also developed into ASCII code, you could do one master tape with several dozen TTY's following it and sending messages to multiple TTY's at multiple locations at one time.
Thus data storage was developed, the reels of paper tape later became punch cards, punch card gave way to magnetic tape, magnetic tape gave way to washing machine sized platter disks, then 8" floppy's, then 5", then 3.5" and so on.
Now a football field full of punch cards filled with data can be held in one 2 GB USB key drive.
And it was "Bit's, Nibbles and Bytes" the breakfast food of Geeks.....