What quality is good for FLAC

I am trying to export as FLAC but under the option settings for FLAC in Audacity 1.3.3 there are various choices. I understand that the level 0-8 is the compression ratio and affects the length of time it takes to convert and the size of memory it takes up on the disc but what does the ‘Bit Depth’ mean? and what is the best setting?

I recorded a FLAC with a bit rate(saving rate) of 700kbps
see http://en.wikipedia.org/wiki/Free_Lossless_Audio_Codec they suggest 800-950.

CDs are recorded 16bit.