Quantization Error

One stream of 16 on or off bits constitutes one of the samples (called a word, where, in the case of CDs, the word length is 16 bits) of musical information collected 44.1 thousand times per second as mentioned above. First, 16 bits are read for one channel (for example, the left channel), and then 16 bits are read for the other channel. Only about one third of the 4.3218 million bits per second read from a compact disc represent the audio signal, and the bitstream is controlled by a master clock of that same frequency (4.3218 Mega Hertz, or MHz). The rest are used for "Data Management" or "Overhead". The order of the bits in terms of whether each bit is on (1) or off (0) is a code for one tiny spot (in the form of voltage) on the musical waveform. For example, a word might be represented by the sequence 1001101000101001 (called a binary number).
In a way, it is like Morse Code, where each unique series of dots and dashes is a code for a letter of the alphabet. There are 216 (more than 65,000) possible combinations of 16 bits being on or off in sequence, allowing CD recordings very fine detail as to how the waveform is coded. Even with 65,000 combinations of waveform coding (32,500 for the positive part of the waveform and 32,500 for the negative), the sound level (voltage) may occur in between any two sequential points in the 65,000 combinations. The player must round the value up or down to the nearest value in the 65,000 possible combinations, and this is called "Quantization Error". The ability for a CD player to handle quantization error varies, and is occasionally used as a selling point. The next generation of digital discs, of which the CD was the first type, has 48 kHz up to 192 kHz sampling and 20 - 24 bit words. This is the Audio-Only DVDs (Digital Video Disc, or Digital Versatile Disc), called DVD-Audio or DVD-A, which has the room to hold more digital data (about 15 Gigabytes of data compared to 750 Megabytes for CDs). Keep in mind that DVDs are really just CDs at a higher technological capability, i.e., they hold more data. It is sort of like upgrading your computer hard disk drive from a 750 MB capacity to a 15 GB capacity.