It is useful to understand the concept of Color Modes within Adobe Photoshop. There are quite a few to choose from within the Image->Mode menu, but the most commonly used are Grayscale, RGB and CMYK.
Commonly referred to as ‘Black and White’
Usage: Print and screen output
Description: From black (0) to white (255) with a gradient of shades between. Totalling at 256 shades (‘0’ of course is a shade (black)). Although 256 shades doesn’t sound a lot, it is more than enough to produce a good black and white print.
Usage: Primarily for screen output
Description: Additive colour mode (the higher the tonal value, the lighter it gets). Similar to a grayscale, in that each colour ‘Channel’ contains tones from black ‘0’ to white ‘255’ and a gradient of shades between. The obvious difference is that each gray shade translates to the tonal strength of the particular colour. An RGB images contains 3 channels of tonal information, each with 256 shades. To calculate the total amount of colours possible within an RGB image: 256 x 256 x 256 = 16,777,216 (16.7 million)
Description: Subtractive colour mode (the higher the tonal value, the darker it gets). Each Channel contains 256 shades similar to RGB, but in reverse. ‘0’ is the absence of colour (white) and 256 the highest saturation level.