Quantization introduces an irreversible approximation: each continuous value is rounded to the nearest representable digital level. The maximum quantization error is ±½ LSB (Least Significant Bit). For an N-bit system, the quantization step size is (full range) / 2N. This error manifests as banding in images (posterization) and as staircase artifacts in intensity profiles.
The quantization noise floor sets a theoretical limit on measurement precision. For uniformly distributed quantization error, the RMS noise is approximately (step size) / √12.