Number systems are ways to represent and express quantities using symbols and rules, while binary arithmetic is a form of arithmetic that operates in the base-2 numeral system, utilizing only two digits: 0 and 1. These concepts are essential in understanding how computers and digital systems perform calculations, store data, and communicate information. Number systems include various bases such as decimal (base-10), hexadecimal (base-16), and octal (base-8), but binary is fundamental as it aligns with the on/off states of electronic components.