Characters are made up of bytes (one or more depending on type of encoding, ascii uses one byte per character), but they're both made up of bits :)

warn unpack 'b*', 'a';
warn pack 'b*', '10000110';
__END__
10000110 at - line 1.
a at - line 2.
[download]

The bits/bytes stuff is basic CS knowledge (you should google for a tutorial).