> We use binary states in normal computing to reduce entropy. In AI this is less of a concern, so why not use more of the available voltage range?
Transistors that are fully closed or fully open use basically no energy: they either have approximately zero current or approximately zero resistance.
Transistors that are partially open dissipate a lot of energy; because they have some current flowing at some resistance. They get hot.
In addition, modern transistors are so small and so fast that the number of electrons (or holes..) flowing through them in clock cycle is perhaps in the range of a few dozen to a hundred. So that gives you at most 7 bits (~log_2(128)) of precision to work with in an analog setting. In practice, quite a bit less because there's a lot of thermal noise. Say perhaps 4 bits.
Going from 1 bit per transistor to 4 bits (of analog precision) is not worth the drastically higher energy consumption nor the deviation from the mainstream of semi-conductor technological advances.