Earlier quoted context omitted.
More than 21-bits is meaningless. It's all hype beyond 24-bits.
Why 21-bits specifically? https://web.archive.org/web/20200310174634/https://people.xi...
The trick is that our hearing systems are logarithmic (we can't hear a quiet sound next to a loud sound--that's what compression relies on), so they map to floating point numbers better (ie. 16-bit floating point is way more than enough).
24-bits is effectively for recording engineers so they have lots of headroom and don't have to worry about clipping basically at all (6dbm per bit implies about 18dbm of extra headroom which is a LOT).
However, when you calculate non-linear audio effects, you want extra bit depth (generally floating point) because cancellation and multiplication in your intermediate results can really move your noise floor up into bits that humans can actually hear.