A bit is a persona, act, or frame of mind that is created to reflect a non-reality in the real world. Often it is employed to show irony, satire, or absurdity in the environment in which it appears in.
Any form of pretend play in which the pretender insists that their act of play is reality is creating a "bit".
For instance: Steven Colbert's character, Steven Colbert (pronounced Col-bear), and his show The Colbert Report showcases a bit that involves a cable news pundit and his ongoing conversation with America in reference towards current events. The character often employs exaggeration and irony as a commentary on politics, the news media, and the mass media as a whole.