Quantization
The real world has an infinite number of states, but the digital world has a very limited number of states. Quantizing is process of assigning an amplitude to this limited quantity of states. Quantization noise occurs when an amplitude is rounded to the nearest state for the given number of bits. This is illustrated in the Bits section. Using 2 bits causes large rounding errors and only roughly follows the real waveform. Using 3 bits has much smaller rounding errors, but is still nowhere near as smooth as the real world waveform. Using 8 bits gives a much smoother waveform, but the round errors can still be heard. Using 16 bits gives errors so small that they are almost imperceptible.