On 16 bits you can fit pow(2,16) (2 to the power of sixteenth) different combinations to represent 65536 numbers. It was decided that zero looks best represented natively as 000...000 and positive numbers in "two's complement" system are normally readable (they're equal to so called "natural binary" representation like 0000 0000 0000 0101 = 5 decimal etc).
Negative numbers in two's complement start with 1111 1111 1111 1111 to represent -1. Think about it as a counter dial with numbers that goes 997, 998, 999 and suddenly when it has to represent 1000 it overflows and shows 000. The principle is the same here, but the direction is other way around - from ...000 to ...111. -2 is represented as 1111....1110 and so on.
Lowest possible number in two's complement will have 1 on front and zeroes on the rest of digits.