Indeed, bites is the correct spelling for this context. The dust would be the dust on the ground a person would get in his/her mouth after falling (with a biting action), usually dead. Nowadays, this expression is used when someone quits something. Maybe someone quit a job after finding it tough, or poor management caused a bad situation. Example: A: "Did you hear that John quit last week?" B: "Really?, another one bites the dust." You could listen to Queen - Another one bites the dust. After someone has bitten the dust, you need 'another lamb to the slaughter' to replace them. bites, is the 3rd person singular form of, to bite. I/We/they bite He/She/It/John bites I hope this helps.

Byte is actually in English though. It is the storage unit for a computer. However it would not be used in the sentence that you have provided.

Smack that pommy in the knickers for that one. No British English indeed! Leave him stuffed in a bonnet with his fags. Dude, chill. You're all in a way. I'm like, WHATeverr. British English is a very correct term, especially to differentiate from American english. 'Bite the dust' is cowboy slang. The idea is of being shot while on horseback, falling off and hitting the dusty ground.

Sorry - I should have said. No bites and bytes are NOT interchangeable. Unless you are talking about computers, you MUST use bites.

Another term is "croak". Croak is a low hoarse sound - it is also the sound a frog makes. "He croaked last month" = "He died last month" Croak probably comes from the "death rattle" that happens after a person dies. When a person dies there is still air in their lungs. About an hour after death, the lungs collapse enough the the last air is expelled. It is a very strange sound, low and hoarse - a croak. One warning - both "bites the dust" and "croak" are very insensitive terms. If you are learning English, it's better if you never use them (or any slang, for that matter).