What is quantization and what is quantization noise?

Quantization maps continuous amplitude values to a finite set of discrete levels during analog-to-digital conversion. With B bits, there are 2^B levels. Quantization error is the difference between actual and quantized values, appearing as quantization noise. For uniform quantization of full-scale sinusoid, SNR approximately equals 6.02B + 1.76 dB (each bit adds ~6dB). Quantization noise is modeled as uniform random noise. Dithering (adding small noise before quantization) can decorrelate quantization error from signal, improving perceived quality in audio.