The decimal (SI) definition uses powers of 10: 1 kilobyte (KB) = 1,000 bytes, 1 megabyte (MB) = 1,000,000 bytes, 1 gigabyte (GB) = 1,000,000,000 bytes, 1 terabyte (TB) = 1,000,000,000,000 bytes. This is the standard used by hard drive manufacturers and most network equipment (internet speeds are measured in this system).
The binary definition uses powers of 2: 1 kibibyte (KiB) = 1,024 bytes (2¹⁰), 1 mebibyte (MiB) = 1,048,576 bytes (2²⁰), 1 gibibyte (GiB) = 1,073,741,824 bytes (2³⁰), 1 tebibyte (TiB) = 1,099,511,627,776 bytes (2⁴⁰). This is the system traditionally used by operating systems and RAM manufacturers. The International Electrotechnical Commission (IEC) introduced the kibi/mebi/gibi prefix notation in 1998 to eliminate ambiguity, but the old KB/MB/GB labels are still widely used for both.
Why your drive shows less space than advertised
A hard drive manufacturer sells a '1 TB' drive using the decimal definition: 1,000,000,000,000 bytes. Windows reports storage in traditional binary-style gigabytes: 1,000,000,000,000 / 1,073,741,824 = 931.32 GiB — but Windows displays this as '931 GB' (using the GiB value but the GB label). macOS switched to decimal reporting in OS X 10.6, so a 1 TB drive shows as 1 TB in macOS but 931 GB in Windows. The drive hasn't changed; only the reporting convention has.
RAM is manufactured and sold in binary sizes: 8 GB of RAM is exactly 8,589,934,592 bytes (8 GiB). Both the seller and the OS agree on the binary definition for RAM, so there's no discrepancy. The confusion is specifically between storage device manufacturers (decimal) and operating systems that historically used binary counting for storage (Windows still does, macOS changed).
Practical implications for file sizes and transfer speeds
Network speeds are almost universally measured in decimal units: a 1 Gbps connection transfers 1,000,000,000 bits per second, which is 125,000,000 bytes per second (125 MB/s decimal). Downloading a 1 GiB (1,073,741,824 byte) file at that speed takes 1,073,741,824 / 125,000,000 ≈ 8.6 seconds. If you mistakenly used 1 GB = 1,000,000,000 bytes, you'd calculate 8.0 seconds — close but not exact.
For everyday purposes, the difference between decimal and binary units is small at lower magnitudes (2.4% at KB, 4.9% at MB, 7.4% at GB) but grows at larger scales (10.0% at TB, 12.6% at PB). For planning data center storage or cloud capacity, this difference is significant enough to cause budget overruns if the wrong definition is used in calculations.