But you don't need to use old audio hardware for making chiptune music, because modern digital audio workstations are capable of replicating those sounds pretty faithfully. Music produced today under the restrictions of 8bit and 16bit hardware is often called 'chiptune'. The 8bit generation was a lot more dominated by beeps and buzzes, while the 16bit generation could produce sounds which sort of sounded like modern synths, occasionally even real instruments and a few games even managed to get halfway decent voice samples out of that hardware. The technical details of synthesizers are not my area of expertise, but you can definitely hear the difference in audio between the two generations. They usually had a limited number of oscillators on board with a limited number of settings. They instead synthesized music and sound effects right on the device. There just wasn't enough storage space for that. But in general the consoles only had very limited capabilities for playing pre-recorded digital audio (like all the sound you hear in games of today).

When it comes to audio capabilities it becomes even more confusing than with graphics, due to the very different ways the consoles of that time created sound. Yet modern retro-games aiming for a 16bit aesthetic often tend to use higher resolutions than those aiming for an 8bit aesthetic. It just wouldn't have been possible to go higher without requiring to sell a dedicated monitor with the gaming system. Why? Because that was the resolution of TV sets of that time. The screen resolutions of those consoles were actually all the same: 256 x 240 in Europe and 256x224 in North-America.

Dithering to mix colors and to do brightness gradients (which actually looked a lot better on old CRT TVs than it looks on modern LED screens).

It also allowed to create some neat (for that time) animation effects based on color-cycling without requiring to add the sprite data for all animation phases. This didn't just allow to reuse sprites for different game entities by simply changing their color. Some of these systems were able to switch out palettes of sprites on the fly.

Sprites with even more limited color palettes.

Or alternatively, environments which were more colorful, but with a lot of 'flat' colors and little shading.

Environments using a single dominant color, because complimentary colors would have used up too many of the colors per screen.

They resulted in typical stylistic choices of that time: These palette restrictions were a main driver behind the visual aesthetics of the games of that time.

Wav 8 bit vs 16 bit