Analog vs. Digital
jimblom 
Digital Signals
Digital signals must have a finite set of possible values. The number of values in the set can be anywhere between two and a-very-large-number-that's-not-infinity. Most commonly digital signals will be one of two values -- like either 0V or 5V. Timing graphs of these signals look like square waves.
Or a digital signal might be a discrete representation of an analog waveform. Viewed from afar, the wave function below may seem smooth and analog, but when you look closely there are tiny discrete steps as the signal tries to approximate values:
That's the big difference between analog and digital waves. Analog waves are smooth and continuous, digital waves are stepping, square, and discrete.
Example Digital Signals
Not all audio and video signals are analog. Standardized signals like HDMI for video (and audio) and MIDI, I2S, or AC'97 for audio are all digitally transmitted.
Most communication between integrated circuits is digital. Interfaces like serial, I2C, and SPI all transmit data via a coded sequence of square waves.
