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How is an integer stored in memory?

This is most probably the dumbest question anyone would ask, but regardless I hope I will find a clear answer for this.
My question is - How is an integer stored in computer memory?
In c# an integer is of size 32 bit. MSDN says we can store numbers from -2,147,483,648 to 2,147,483,647 inside an integer variable.
As per my understanding a bit can store only 2 values i.e 0 & 1. If I can store only 0 or 1 in a bit, how will I be able to store numbers 2 to 9 inside a bit?
More precisely, say I have this code int x = 5; How will this be represented in memory or in other words how is 5 converted into 0's and 1's, and what is the convention behind it?

It's represented in binary (base 2). Read more about number bases. In base 2 you only need 2 different symbols to represent a number. We usually use the symbols 0 and 1. In our usual base we use 10 different symbols to represent all the numbers, 0, 1, 2, ... 8, and 9.
For comparison, think about a number that doesn't fit in our usual system. Like 14. We don't have a symbol for 14, so how to we represent it? Easy, we just combine two of our symbols 1 and 4. 14 in base 10 means 1*10^1 + 4*10^0.
1110 in base 2 (binary) means 1*2^3 + 1*2^2 + 1*2^1 + 0*2^0 = 8 + 4 + 2 + 0 = 14. So despite not having enough symbols in either base to represent 14 with a single symbol, we can still represent it in both bases.
In another commonly used base, base 16, which is also known as hexadecimal, we have enough symbols to represent 14 using only one of them. You'll usually see 14 written using the symbol e in hexadecimal.
For negative integers we use a convenient representation called twos-complement which is the complement (all 1s flipped to 0 and all 0s flipped to 1s) with one added to it.
There are two main reasons this is so convenient:
We know immediately if a number is positive of negative by looking at a single bit, the most significant bit out of the 32 we use.
It's mathematically correct in that x - y = x + -y using regular addition the same way you learnt in grade school. This means that processors don't need to do anything special to implement subtraction if they already have addition. They can simply find the twos-complement of y (recall, flip the bits and add one) and then add x and y using the addition circuit they already have, rather than having a special circuit for subtraction.

This is not a dumb question at all.
Let's start with uint because it's slightly easier. The convention is:
You have 32 bits in a uint. Each bit is assigned a number ranging from 0 to 31. By convention the rightmost bit is 0 and the leftmost bit is 31.
Take each bit number and raise 2 to that power, and then multiply it by the value of the bit. So if bit number three is one, that's 1 x 23. If bit number twelve is zero, that's 0 x 212.
Add up all those numbers. That's the value.
So five would be 00000000000000000000000000000101, because 5 = 1 x 20 + 0 x 21 + 1 x 22 + ... the rest are all zero.
That's a uint. The convention for ints is:
Compute the value as a uint.
If the value is greater than or equal to 0 and strictly less than 231 then you're done. The int and uint values are the same.
Otherwise, subtract 232 from the uint value and that's the int value.
This might seem like an odd convention. We use it because it turns out that it is easy to build chips that perform arithmetic in this format extremely quickly.

Binary works as follows (as your 32 bits).
1 1 1 1 | 1 1 1 1 | 1 1 1 1 | 1 1 1 1 | 1 1 1 1 | 1 1 1 1 | 1 1 1 1 | 1 1 1 1
2^ 31 30 29 28 27 26 25 24 23 22 21 20 19 18 17 16......................................0
x
x = sign bit (if 1 then negative number if 0 then positive)
So the highest number is 0111111111............1 (all ones except the negative bit), which is 2^30 + 2 ^29 + 2^28 +........+2^1 + 2^0 or 2,147,483,647.
The lowest is 1000000.........0, meaning -2^31 or -2147483648.

Is this what high level languages lead to!? Eeek!
As other people have said it's a base 2 counting system. Humans are naturally base 10 counters mostly, though time for some reason is base 60, and 6 x 9 = 42 in base 13. Alan Turing was apparently adept at base 17 mental arithmetic.
Computers operate in base 2 because it's easy for the electronics to be either on or off - representing 1 and 0 which is all you need for base 2. You could build the electronics in such a way that it was on, off or somewhere in between. That'd be 3 states, allowing you to do tertiary math (as opposed to binary math). However the reliability is reduced because it's harder to tell the difference between those three states, and the electronics is much more complicated. Even more levels leads to worse reliability.
Despite that it is done in multi level cell flash memory. In these each memory cell represents on, off and a number of intermediate values. This improves the capacity (each cell can store several bits), but it is bad news for reliability. This sort of chip is used in solid state drives, and these operate on the very edge of total unreliability in order to maximise capacity.

How do I interpret a WORD or Nibble as a number in C#?

I don't come from a low-level development background, so I'm not sure how to convert the below instruction to an integer...
Basically I have a microprocessor which tells me which IO's are active or inactive. I send the device an ASCII command and it replies with a WORD about which of the 15 I/O's are open/closed... here's the instruction:
Unit Answers "A0001/" for only DIn0 on, "A????/" for All Inputs Active
Awxyz/ - w=High Nibble of MSB in 0 to ? ASCII Character 0001=1, 1111=?, z=Low Nibble of LSB.
At the end of the day I just want to be able to convert it back into a number which will tell me which of the 15 (or 16?) inputs are active.
I have something hooked up to the 15th I/O port, and the reply I get is "A8000", if that helps?
Can someone clear this up for me please?

You can use the BitConverter class to convert an array of bytes to the integer format you need.
If you're getting 16 bits, convert them to a UInt16.
C# does not define the endianness. That is determined by the hardware you are running on. Intel and AMD processors are little-endian. You can learn the endian-ness of your platform using BitConverter.IsLittleEndian. If the computer running .NET and the hardware providing the data do not have the same endian-ness, you would have to swap the two bytes.
byte[] inputFromHardware = { 126, 42 };
ushort value = BitConverter.ToUInt16( inputFromHardware, index );
which of the 15 (or 16?) inputs are active
If the bits are hardware flags, it is plausible that all 16 are used to mean something. When bits are used to represent a signed number, one of the bits is used to represent positive vs. negative. Since the hardware is providing status bits, none of the bits should be interpreted as a sign.
If you want to know if a specific bit is active, you can use a bit mask along with the & operator. For example, the binary mask
0000 0000 0000 0100
corresponds to the hex number
0x0004
To learn if the third bit from the right is toggled on, use
bool thirdBitFromRightIsOn = (value & 0x0004 != 0);
UPDATE
If the manufacturer says the value 8000 (I assume hex) represents Channel 15 being active, look at it like this:
Your bit mask
1000 0000 0000 0000 (binary)
8 0 0 0 (hex)
Based in that info from the manufacturer, the left-most bit corresponds to Channel 15.
You can use that mask like:
bool channel15IsOn = (value & 0x8000 != 0);

A second choice (but for Nibbles only) is to use the Math library like this:
string x = "A0001/"
int y = 0;
for (int i = 3; i >= 0; i--)
{
if (x[4-i] == '1')
y += (int)Math.Pow(2,i);
}
Using the ability to treat a string as an array of characters by just using the brackets and a numeric character as a number by casting you can make the conversion from bits to an integer hardcoded.
It is a novice solution but i think it's a proper too.

How does a logical & work on two bytes in C#?

I recently had a test question:
byte a,b,c;
a = 190;
b = 4;
c = (byte)(a & b);
What is the value of c?
I have never used a logical operand in this manner, what's going on here? Stepping through this, the answer is 4, but why?
Also, where would this come up in the real world? I would argue that using logical operands in this manner, with a cast, is just bad practice, but I could be wrong.

You are doing a bitwise AND in this case, not a logical AND, it is combining the bits of the two values of a & b and giving you a result that has only the bits set that are both set in a & b, in this case, just the 4s place bit.
190 = 10111110
& 4 = 00000100
-------------------
= 4 00000100
Edit: Interestingly, msdn itself makes the issue of whether to call it logical vs bitwise a bit muddy. On their description of the logical operators (& && | || etc) they say logical operators (bitwise and bool) but then on the description of & itself it indicates it performs a bitwise AND for integers and a logical AND for bools. It appears it is still considered a logical operator, but the action between integer types is a bitwise AND.
http://msdn.microsoft.com/en-us/library/sbf85k1c(v=vs.71).aspx

The logical AND operator, when applied to integers performs a bitwise AND operation. The result is 1 in each position in which a 1 appears in both of the operands.
0011
& 0101
------
0001
The decimal value 190 is equivalent to binary 10111110. Decimal 4 is binary 00000100.
Do a logical AND operation on the bits like this:
10111110
& 00000100
----------
00000100
So the result is 4.
Also, where would this come up in the real world? I would argue that using logical operands in this manner, with a cast, is just bad practice, but I could be wrong.
These operations are useful in several circumstances. The most common is when using Enum values as flags.
[Flags]
public enum MyFileOptions
{
None = 0,
Read = 1, // 2^0
Write = 2, // 2^1
Append = 4, // 2^2
}
If an Enum has values that are powers of two, then they can be combined into a single integer variable (with the Logical OR operator).
MyFileOptions openReadWrite = MyFileOptions.Read | MyFileOptions.Write;
In this variable, both bits are set, so it indicates that both the Read and Write options are selected.
The logical AND operator can be used to test values.
bool openForWriting = ((openReadWrite & MyFileOptions.Write) == MyFileOptions.Write);
NOTE
A lot of people are pointing out that this is actually a bitwise AND not a logical AND. I looked it up in the spec before I posted, and I was suprised to learn that both versions are referred to as "Logical AND" in the spec. This makes sense because it is performing the logical AND operation on each bit. So you are actually correct in the title of the question.

This is a bitwise AND, meaning the bits on both bytes are compared, and a 1 is returned if both bits are 1.
10111110 &
00000100
--------
00000100

One of the uses of a logical & on bytes is in networking and is called the Binary And Test. Basically, you logical and bytes by converting them to binary and doing a logical and on every bit.

In binary
4 == 100
190 == 10111110
& is and AND operation on the boolean operators, so it does de Binary and on 4 and 190 in byte format, so 10111110 AND 100 gives you 100, so the result is 4.

This is a bitwise AND, not a logical AND. Logical AND is a test of a condition ie:
if(a && b) doSomething();
A bitwise AND looks at the binary value of the two variables and combines them. Eg:
10101010 &
00001000
---------
00001000

This lines up the binary of the two numbers, like this:
10111110
00000100
--------
00000100
On each column, it checks to see if both numbers are 1. If it is, it will return 1 on the bottom. Otherwise, it will return 0 on the bottom.

I would argue that using logical operands in this manner, with a cast, is just bad practice, but I could be wrong.
There is no cast. & is defined on integers, and intended to be used this way. And just so everyone knows, this technically is a logical operator according to MSDN, which I find kind of crazy.

Why arithmetic shift halfs a number only in SOME incidents?

Hey, I'm self-learning about bitwise, and I saw somewhere in the internet that arithmetic shift (>>) by one halfs a number. I wanted to test it:
44 >> 1 returns 22, ok
22 >> 1 returns 11, ok
11 >> 1 returns 5, and not 5.5, why?
Another Example:
255 >> 1 returns 127
127 >> 1 returns 63 and not 63.5, why?
Thanks.

The bit shift operator doesn't actually divide by 2. Instead, it moves the bits of the number to the right by the number of positions given on the right hand side. For example:
00101100 = 44
00010110 = 44 >> 1 = 22
Notice how the bits in the second line are the same as the line above, merely
shifted one place to the right. Now look at the second example:
00001011 = 11
00000101 = 11 >> 1 = 5
This is exactly the same operation as before. However, the result of 5 is due to the fact that the last bit is shifted to the right and disappears, creating the result 5. Because of this behavior, the right-shift operator will generally be equivalent to dividing by two and then throwing away any remainder or decimal portion.

11 in binary is 1011
11 >> 1
means you shift your binary representation to the right by one step.
1011 >> 1 = 101
Then you have 101 in binary which is 1*1 + 0*2 + 1*4 = 5.
If you had done 11 >> 2 you would have as a result 10 in binary i.e. 2 (1*2 + 0*1).
Shifting by 1 to the right transforms sum(A_i*2^i) [i=0..n] in sum(A_(i+1)*2^i) [i=0..n-1]
that's why if your number is even (i.e. A_0 = 0) it is divided by two. (sorry for the customised LateX syntax... :))

Binary has no concept of decimal numbers. It's returning the truncated (int) value.
11 = 1011 in binary. Shift to the right and you have 101, which is 5 in decimal.

Bit shifting is the same as division or multiplication by 2^n. In integer arithmetics the result gets rounded towards zero to an integer. In floating-point arithmetics bit shifting is not permitted.
Internally bit shifting, well, shifts bits, and the rounding simply means bits that fall off an edge simply getting removed (not that it would actually calculate the precise value and then round it). The new bits that appear on the opposite edge are always zeroes for the right hand side and for positive values. For negative values, one bits are appended on the left hand side, so that the value stays negative (see how two's complement works) and the arithmetic definition that I used still holds true.

In most statically-typed languages, the return type of the operation is e.g. "int". This precludes a fractional result, much like integer division.
(There are better answers about what's 'under the hood', but you don't need to understand those to grok the basics of the type system.)

C/C++ Date Solution/Conversion

I need to come up with a way to unpack a date into a readable format. unfortunately I don't completely understand the original process/code that was used.
Per information that was forwarded to me the date was packed using custom C/Python code as follows;
date = year << 20;
date |= month << 16;
date |= day << 11;
date |= hour << 6;
date |= minute;
For example, a recent packed date is 2107224749 which equates to Tuesday Sept. 22 2009 10:45am
I understand....or at least I am pretty sure....the << is shifting the bits but I am not sure what the "|" accomplishes.
Also, in order to unpack the code the notes read as follows;
year = (date & 0xfff00000) >> 20;
month = (date & 0x000f0000) >> 16;
day = (date & 0x0000f800) >> 11;
hour = (date & 0x000007c0) >> 6;
minute = (date & 0x0000003f);
Ultimately, what I need to do is perform the unpack and convert to readable format using either JavaScript or ASP but I need to better understand the process above in order to develop a solution.
Any help, hints, tips, pointers, ideas, etc. would be greatly appreciated.

The pipe (|) is bitwise or, it is used to combine the bits into a single value.
The extraction looks straight-forward, except I would recommend shifting first, and masking then. This keeps the constant used for the mask as small as possible, which is easier to manage (and can possibly be a tad more efficient, although for this case that hardly matters).
Looking at the masks used written in binary reveals how many bits are used for each field:
0xfff00000 has 12 bits set, so 12 bits are used for the year
0x000f0000 has 4 bits set, for the month
0x0000f800 has 5 bits set, for the day
0x000007c0 has 5 bits set, for the hour
0x0000003f has 6 bits set, for the minute

The idea is exactly what you said. Performing "<<" just shifts the bits to the left.
What the | (bitwise or) is accomplishing is basically adding more bits to the number, but without overwriting what was already there.
A demonstration of this principle might help.
Let's say we have a byte (8 bits), and we have two numbers that are each 4 bits, which we want to "put together" to make a byte. Assume the numbers are, in binary, 1010, and 1011. So we want to end up with the byte: 10101011.
Now, how do we do this? Assume we have a byte b, which is initialized to 0.
If we take the first number we want to add, 1010, and shift it by 4 bits, we get the number 10100000 (the shift adds bytes to the right of the number).
If we do: b = (1010 << 4), b will have the value 10100000.
But now, we want to add the 4 more bits (0011), without touching the previous bits. To do this, we can use |. This is because the | operator "ignores" anything in our number which is zero. So when we do:
10100000 (b's current value)
|
00001011 (the number we want to add)
We get:
10101011 (the first four numbers are copied from the first number,
the other four numbers copied from the second number).
Note: This answer came out a little long, I'm wikiing this, so, if anyone here has a better idea how to explain it, I'd appreciate your help.

These links might help:
http://www.gamedev.net/reference/articles/article1563.asp
http://compsci.ca/v3/viewtopic.php?t=9893

In the decode section & is bit wise and the 0xfff00000 is a hexadecimal bit mask. Basically each character in the bit mask represents 4 bits of the number. 0 being 0000 in binary and f being 1111 so if you look at the operation in binary you are anding 1111 1111 1111 0000 0000 ... with whatever is in date so basically you are getting the upper three nibbles(half bytes) and shifting them down so that 00A00000 gives you 10(A in hex) for the year.
Also note that |= is like += it is bit wise or then assignment rolled in to one.

Just to add some practical tips:
minute = value & ((1 << 6)-1);
hour = (value >> 6) & ((1<<5)-1); // 5 == 11-6 == bits reserved for hour
...
1 << 5 creates a bit at position 5 (i.e. 32=00100000b),
(1<<5)-1 cretaes a bit mask where the 5 lowest bits are set (i.e. 31 == 00011111b)
x & ((1<<5)-1) does a bitwise 'and' preserving only the bits set in the lowest five bits, extracting the original hour value.

Yes the << shifts bits and the | is the bitwise OR operator.