Dither
Overview
The term dither is used to describe a special form of wide-band noise that is added to a digital audio signal after the wordlength is reduced. The purpose is to randomize quantization error of low level signals.
Basics
In digital audio, the original analog signal amplitude must be encoded in discrete "steps." The number of possible steps is determined by the wordlength. For high level (large amplitude) signals, the "step size" relative to the signal is small and the resulting quantization error caused by "rounding up or rounding down" to the closest discrete step is small.
At very low signal levels (small amplitude); the error becomes quite significant and the audible effect is a very "non-harmonic" distortion that increases in level as signal level decreases to the least significant bit (lsb) level. By randomizing the error; the distortion is eliminated and this results in a perceived increase in the dynamic range even though the addition of dither (noise) actually decreases the measurable dynamic range.