again very basicly. 
a digital audio signal is basicly a number between 0 and 65535 the
higher the number the louder the sound. in order to attenuate the
volume this number must be reduced. if you have a signal of say 3
which is represented as: 0011 in binary
and you attenuate it by, say, a factor of 4 then you effectively run
out of bits to represent the resulting fractional number (as cd players
use integer maths) and therefore you lose the detail represented by
these 'low' bits.
if you have a 16 bit data source and a 24 bit dac then the '3' read
from the disc can be represented as: 001100000000
you have 8 extra 'low' bits that the previously missing data can be
shifted into so attenuating by 4 now gives you: 000011000000
but go too low and you still run out of bits.
unfortunately it's not always this simple as those extra low bits on a
24 bit dac can also be used for other stuff like dithering and
upsampling which can complicate things.


-- 
julian2002
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