Earlier quoted context omitted.
To answer the obvious next question: Four 5-bit values in order have 20 bits of entropy, so cannot be stored in 16 bits. Four 5-bit values without order have 20 - log2(4!) =~ 20 - 4.59 = 15.41 bits of entropy (corresponding to log(2^20/4!) possible configurations), and thus can fit in 16 bits of data if you're clever about it.
Is there a specific topic of study that taught you those formulas?
But I might just recommend going to the source! which is Claude Shannon's seminal masters thesis on coding: http://affect-reason-utility.com/1301/4/shannon1948.pdf . It's surprisingly readable and worth at least skimming if you like this stuff.