There's a kind of pillow covered in small, reversible sequins, which makes a pretty good analog for the situation inside the computer. If you pet one of these pillows, your hand's motion flips the sequins to show one color or the other, creating patterns. Petting all over the pillow in a single direction restores the pillow to a single color, erasing the pattern. But the pattern didn't really "go anywhere" in the sense that a physical object would -- it was just an arrangement of sequins.

I like this analogy better than comparing it to a bunch of light switches. Gotta keep this in my back pocket.

The real answer is actually the same in both cases: the bits (atoms) get used for something else. Although bones can linger for quite a while, not sure if there's a file parallel for that.

Sure there's a parallel. The bits are still there, in the same place and same order, just there's no longer an index to find and use them, so they're not "alive".

And they remain in the same place until the file space they occupy is reclaimed by the OS and rewritten with new content.

The most funny thing happens with SSDs. Even when same block is reclaimed and overwritten by OS, it very rarely overwrites the bits in NAND flash, due to the wear leveling implemented in SSD controller chip. When the actual bits are destroyed is unpredictable, probably that's why some vendors have hardware encryption there.

There is a issue with sd cards that they can revert back to an earlier state.

Perhaps assure him it's not really gone, Google, Zuckerberg, the NSA, Russia et. al. still have a copy?

Nothing to add, but I really love his question. It's so pure and innocent haha

Waste heat, maybe? (cf. Landauer's principle)