Audio Damage Bitcom - Manual (Page 9)

Now at least we could say that the input
signal is something other than a square
wave, because of those intermediate steps
in the output. Still, most of the detail of
the input is gone—no smooth changes
anywhere.
If we add the next bit down we get closer to
reproducing the input. If you squint your
eyes, or take off your glasses if you wear
any, you’ll see that the output is now not
too far from the shape of the sine wave
input. You can guess what would happen if
we were to continue turning on the bits
buttons from top to bottom: the output
would become closer and closer to the
original sine wave. That’s how a standard
“bit crusher” or bit-depth reducer works: it
throws away the bits that represent the
small details in the signal, leaving you with
a noisier approximation of the input signal.