The answer is $\boxed{\frac{1}{8}}$.
The sequence is a geometric sequence with a common ratio of $\frac{1}{2}$. This means that each term is $\frac{1}{2}$ times the term before it. Starting with the first term, $2$, the sequence is:
$2, 2 \cdot \frac{1}{2} = 1, 1 \cdot \frac{1}{2} = \frac{1}{2}, \frac{1}{2} \cdot \frac{1}{2} = \frac{1}{4}, \frac{1}{4} \cdot \frac{1}{2} = \frac{1}{8}, \dots$
Therefore, the next number in the sequence is $\frac{1}{8}$.
Option A, $\frac{1}{3}$, is not the correct answer because it is not in the sequence. Option B, $\frac{1}{8}$, is the correct answer because it is the next term in the sequence. Option C, $\frac{2}{8}$, is not the correct answer because it is not in the sequence. Option D, $\frac{1}{16}$, is not the correct answer because it is not the next term in the sequence.