The number of bits in a processor refers to the size of the data types that it handles and the size of its registry. Simply put, a 64-bit processor is more capable than a 32-bit processor because it can handle more data at once. A 64-bit processor is capable of storing more computational values, including memory addresses, which means it’s able to access over four billion times as much physical memory than a 32-bit processor.

General rule, if you have under 4GB of RAM in your computer, you don’t need a 64-bit CPU, but if you have 4GB or more, you do.

PS:  Most software is backwards compatible, allowing you to run applications that are 32-bit in a 64-bit environment without any extra work or issues.
In Windows that is why we have 2 folders „Program Files” and „Program Files (x86)” -> For purposes of backward compatibility, Windows x64 needs to run both 64- and 32-bit programs. Windows runs smoother if it keeps these two very different types of code separate. Yep, the codding and Memory addressing is different between 32 and 64. „Program Files (x86)” is the folder for 32 bit programs.