When Owen asked C-3PO if he spoke the binary language of moisture vaporators, the proper answer for him to give (in binary) would have been "with neither too many hands nor too few," that being the idiom for speaking politely and properly. Moisture vaporators use their hands as communication ports, each finger transmitting or receiving a single channel, and touch hands to one another in order to speak; if you were to speak with more hands than the listener had available, they would miss part of what you were saying, and (especially if that were crucial metadata) they would not be able to understand you. Conversely, if you spoke with fewer hands than they listened with, your transmissions would be slow, stilted, taking far too much time. Speaking with the appropriate number of hands is a key aspect of their culture.
But as with many societies, etiquette conceals notions of class: the number of hands a moisture vaporator has is largely determined by wealth and their role. As a result, a common worker with only two or three hands will always seem slow-witted and foolish when trying to speak to a five-handed member of their bourgeoisie, and that burgher would in turn feel profoundly uncomfortable in "seven-handed society."
An eighth hand, by law and by custom, is permitted only to their Emperor, and in fact "the eighth hand" is both a symbol of and metaphor for Imperial power.
However, in the far-less-populated outer reaches of the galaxy, hands maintain their noncommunicative functional use, and these customs are absent. It has been reported that among the small ice moons, where "down" is a matter of opinion, that it is not uncommon for a vaporator to have ten or even twelve hands, radiating in all directions from their central core. These terrestrial customs are entirely unfamiliar there, conversation normally being had with however many hands someone has free at the moment. But it makes one wonder what would happen if emissaries of vaporator "society" were to ever encounter these prospectors: would they mistake the great frequency of many arms for a sign that somewhere there is tremendous wealth hidden? Would they try to plunder asteroid belts in search of a hidden City of Water?
This is the real role of a protocol droid: to communicate to all sides the subtle nuances of each other's cultures, before oil is spilled.
(Below: Moisture vaporators in conference. The small number of arms on the ones on the left indicate that they are common workers, while the ones on the right are likely supervisors. Photo via http://www.propstore.com/blog/star-wars-prequel-trilogy-on-location-in-tunisia/