Bandwidth is the measure of a links capacity to carry or bear traffic. In digital networks bandwidth is measured in bits per second (bps) or more commonly multiples of it, (kbps, Mbps, Gbps). However in signal processing and wireless communications we refer to bandwidth as being an analogue network so it is measured by the carrier frequency in Hertz (Hz).
Bandwidth is usually used to refer to the channel capacity of a link, I.E. the maximum capacity, however it is also sometimes referred to as the consumed amount of bandwidth achieved over a link, for example in bandwidth shaping, bandwidth throttling and bandwidth management. This can arise in confusion between channel capacity and data throughput. The reason for this is because a channel of Xbps does not necessarily transmit data or have throughput at Xbps usually it is much less due to the communication protocol overheads. These are the extra framing overheads required to package up, ‘frame’ the packets that are to be sent across the communication channel.
Additional confusion arises when dealing with downloaded computer files, these are stored and measured in Bytes (KB) which is 8 bits. So when an applications download meter shows you how much of the file has been downloaded or the downloaded speed they use Bytes per second, not bits per second. Therefore to actual see the throughput rate in bps rather than the amount downloaded you have to multiple the download figure by 8.
For a quick estimate take the rough advertised bandwidth for your internet or communication link and divide by 10, this caters for the conversation from bits to bytes (8bits = 1 Byte) and allows 2 bits of overhead for the transmission protocols framing overheads we discussed earlier. Therefore if you have a link rated at 2mbps you will be doing well to see a download rate to approximately 200KBps.
Read more about bandwidth on Wikipedia.