Where does dither fit into this picture?
As an aside, G.711 codecs use a kind of log scale with only four bits of signal but small signal values use much smaller bits.
source- wrote dithering code for digital images
further, the halftone technique developed in the 1880s by Georg Meisenbach — breaking images into dots to simulate shades of gray — was called autotype, not dithering. The term dithering was later adopted in digital imaging and computing, particularly in the 1960s, when engineers applied the concept of adding noise to reduce color banding.