Quantization
Rounding a continuous-amplitude signal to a finite set of discrete levels — the source of quantization error, and the tradeoff behind every bit-depth choice.
Sampling captures a signal's value at discrete times, but each value is still a real number with infinite precision. Quantization is the second step: rounding each sample's amplitude to the nearest of a finite set of allowed levels, so it can be stored as a finite number of bits.
The difference between the true value and its rounded level is the quantization error. With more levels (more bits), the error shrinks; with fewer levels, it grows — a direct tradeoff between storage/bandwidth and fidelity.
An 8-bit quantizer has levels. A 16-bit quantizer (standard for CD audio) has levels — vastly finer resolution, at the cost of twice the storage per sample.
If a signal ranges from 0 to 10 volts and is quantized with 4 bits, how many distinct levels are available, and what's the gap between adjacent levels?
Solution
4 bits gives levels. Spread evenly across the 10-volt range, adjacent levels are volts apart (15 gaps between 16 levels).