If a 4-bit binary digit in 2's Complement form is stored in 8 bits how is it represented?
It depends how the source value should be interpreted.


If the 4 bits are signed then yes, the MS bit gets replicated.
But if the 4 bits are unsigned, the MS bits are set to zero. 


I write a lot of HDL (Verilog) code and I estimate that about 90% of the numbers I deal with are unsigned.