Octal numbers have a base of 8 and use the digits 0-7. They are represented with a leading 0, so 08 would indicate an octal number. Binary numbers have a base of 2 and only use digits 1 and 0. They are represented with a leading b, so b10 would indicate a binary number. The document provides an example of converting the decimal number 418 to binary, which is calculated to be 100001.