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The process of organizing the memory into two banks to allow $8$-and $16$-bit data operation is called

  1. Bank switching
  2. Indexed mapping
  3. Two-way memory interleaving
  4. Memory segmentation
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Please explain the meaning of "to allow 8-and 16-bit data operation".

Does this mean different memory banks have different word size?

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The process of organizing the memory into two banks to allow 8 and 16-bit data operation is called Two-way memory interleaving .

Reference :Memory Interleaving

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Interleaved memory is a design made to compensate for the relatively slow speed of dynamic random-access memory (DRAM) or core memory, by spreading memory addresses evenly across memory banks.
Contiguous memory reads and writes are using each memory bank in turn, resulting in higher memory throughputs due to reduced waiting for memory banks to become ready for desired operations.
Two-Way Interleaved : Two memory blocks are accessed at same time for writing and reading operations
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