What does "32KB (16K x 16)" mean?
16K means 16,384 'storage locations' of 8 bits, thus 16KB.
64 x 16 means 64 storage locations of 16 bits, thus 128 (8 bit) bytes.

The example you give for the Atmega is thus 16,384 times 16 (bits) is 32,768 (8 bit) bytes.

Normally the 'B' in KB is Byte, which is 8 bits, however due to the hardware layout memory sometimes is layout in 16 bits.