Bits Of Indexes RFC

I suppose this is more an RFC than a true question, but I've come to realize "bit" data types do not optimize a query when they are used in a WHERE clause. Since they cannot be indexed, it forces the analyzer to query an available index for rows based upon the non-bit constraints. The result is then scanned to match the values of the bit constraints of the query. So you're potentially doing a full table scan, or an index scan.

My original thought was that I'd improve performance by using bit fields since they are a smaller datatype, but as development progressed, we began using those bits in our queries. At this point, it may be beneficial to convert those bit types to smallint.

Am I wrong in my conclusion?