Hexadecimal numbers are just a convenient representation of binary data. When entered as text, they consist of ASCII characters 0-9 and a-f. The numbers will then have to be converted to binary. This is accomplished by converting to uppercase, subtracting the ASCII offset (48 for 0-9 or 55 for A-F), so that the result is a number between 0 and 15 (inclusive). This can be stored in computer memory to represent 4 bits.
Hexadecimal numbers represent binary numbers in the following way:
hex | binary
0 = 0000
1 = 0001
2 = 0010
3 = 0011
4 = 0100
5 = 0101
6 = 0110
7 = 0111
8 = 1000
9 = 1001
a = 1010
b = 1011
c = 1100
d = 1101
e = 1110
f = 1111
As you can see, no other 4 bit combination exists.