A digital system is the one that handles only discrete values or signals. Any set that is restricted to a finite number of elements contains discrete information. The word digital describes any system based on discontinuous data or events. Digital is the method of storing, processing and transmitting information through the use of distinct electronic pulses that represent the binary digits 0 and 1. Examples of discrete sets are the 10 decimal digits, the 26 letters of the alphabet etc. A digital system would be to flick the light switch on and off. There's no 'in between' values.

Advantages of digital signals

The usual advantages of digital circuits when compared to analog circuits are:

Noise Margin (resistance to noise/robustness) : Digital circuits are less affected by noise. If the noise is below a certain level (the noise margin), a digital circuit behaves as if there was no noise at all. The stream of bits can be reconstructed into a perfect replica of the original source. However, if the noise exceeds this level, the digital circuit cannot give correct results.

Error Correction and Detection : Digital signals can be regenerated to achieve lossless data transmission, within certain limits. Analog signal transmission and processing, by contrast, always introduces noise.