Here's a very simple description of binary arithmetic. For more theory, see the Savitch book at page 545 - 548.
Subtraction is harder.
Don't worry about it. Documents formatted in a word processor take up a lot more space, though, and the operating system and software usually fill at least 100 megabytes. That's another topic. They just use two values of voltage, magnetism, or other signal, which makes the hardware easier to design and more noise resistant. Check your answers against the list.