ignoring signed values for a moment, each bit represents a power of 2. In normal integers, for example...
000 = 0
001 = 1 (2 to the 0th power is 1)
010 = 2 (2 to the 1 power is 1)
011 = 3 (2 + 1 = 3)
111 = 7 (2 to the 2nd = 4 + 2 to the 1 + 2 to the 0)
and so on.
fractions would work the same way as base 10 except in base 2. So .1 in base 10 is 1/10. .1 in base 2 is 1/2. .01 in base 10 is 1/100. .01 in base 2 is 1/4. Here that is 10*10 and 2*2 respectively.