Used a lot in computers. See binary.
When data is transmitted using analogue methods, a certain amount of noise? enters into the signal. This can be have a myriad of different causes: data transmitted via radio may get a poor reception, have interference from other radio sources, or pick up background radio noise from the rest of the universe. Electric pulses being sent down wires are impeded by the resistance of the wire, and heat variations can increase or reduce these resistances. Whilst digitally transmissions are also degregated, any slight variations can be safely ignored. Any variance could provide a great amount of distortion in an analogue signal. In a digital signal, these variences can be overcome, as any signal close to a particular value will be interpreted as that value.
For human readable information, both digital and analogue display methods can be useful. Should an instant impression be required, analogue meters often give information quickly. Many people glance quickly at their watch and know roughly what the time is. A needle just touching onto the bottom of an orange shaded area is much different to a needle almost touching into the red area, but an indicator lamp would just glow orange. When accuracy is required, however, digital displays are preferred. Reading analogue meters requires time and a little bit of skill, whereas writing down the value on a digital display is merely a case of copying down the numbers. In cases where both accuracy and quick reckoning are both required, dual displays are often used.
When an analogue source needs to be converted into a digital signal for processing by other digital systems, some data is lost. The Analogue to Digital converter only has a certain resolution: whereas the human eye may be able to detect millions of different shades of pure green, the CCD in a digital camera may only be capable of 256, and at a resolution of a megapixel or so. Whilst this information will be preserved in future transmission, the data has been lost. It should be noted that photographic film is not perfect, and aberrations will appear in this.
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