If you want to preserve as much detail and quality in your image as possible, then you should use 16-bit in Photoshop. This will give you the most accurate representation of your image, and provide the best results when editing or printing it.
However, if you are working with a lower quality image, or one that doesn’t need to be edited extensively, then you can use 8-bit. This will save you some time and disk space, and is perfectly adequate for most purposes.
So, when should you use 16-bit in Photoshop? If you need to preserve detail and quality, or if you’ll be editing the image extensively. Otherwise, 8-bit is perfectly fine.