Dither - Definition

http://www.weiss-highend.ch/medea/documents/medea_manual_000.pdf

"Suppose a digital recording has been made with a 24 bit A/D converter and a 24
bit recorder. Now this recording should be transferred to a CD which has just 16 bits per sample,
as you know. What to do with those 8 bits which are too many?

The simplest way is to cut them off, truncate them. This, unfortunately, generates harmonic distortions at low levels, but which nonethless cause the audio to sound harsh and unpleasant. The harmonic distortion is generated because the eight bits which are cut off from the 24 bits are correlated with the audio signal, hence the resulting error is also correlated and thus there are distortions and not just noise (noise would be uncorrelated). The dithering technique now is used to de-correlate the error from the signal.

This can be achieved by adding a very low level noise to the original 24 bit signal before
truncation. After truncation the signal does not show any distortion components but a slightly
increased noise floor. This works like magic..... the distortion is replaced by a small noise – much
more pleasant."