How does one know if an 8 bit MCU is sufficient or 16 bit MCU is needed?
Usually, the decision about the microcontroller is a balance between:


Special features (low power consumption, for example)
Development time.
Cost of goods in production.


If short development time has more priority than cost of goods, then go for the more muscular controller.  You can do cost optimization later as a separate stage.  Premature costoptimization [sic] often spoils projects. 

If you are already in the cost optimization stage, then you start from a working product.  The early non-optimized version acts as a prototype for the optimized version.  The early version flushes out the requirements.

Related: How to choose a MCU platform?