When I hear 'bit' in the cointext of Bitcoin I think of it as a satoshi, i.e. the smallest denomination. I know a lot of people tend to use it to refer to a bitcoin as it rolls of the tongue a little easier in conversation.
Same. A bit just sounds like a tiny piece of a coin. All the denominations are confusing though.
Tell me about it, I'm only familiar with satoshis due to dice games, I never reference things in mBTC as I've never really needed to.