Microprocessor
The program counter in a 8085 micro-processor is a 16-bit register, because

 It facilitates the user storing 16-bit data temporarily
 It has to fetch two 8-bit data at a time
 There are 16 address lines
 It counts 16-bits at a time

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Microprocessor
A high on RESET OUT signifies that

 all the registers and counters are being reset
 all the registers and counters are being reset and this signal can be used to reset external support chip
 all the registers of the CPU are being reset
 processing can begin when this signal goes high

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