There are no "stair steps" in digital audio.Correct, but only after reconstruction filtering.
For people who want to learn about it, you really ought to go back to the original journal articles by the pioneers in telecom int he 1960s - from the Bell Labs Technical Journal and the Lenkurt Demodulator, the Demodulator being very accessible and written for the client base, not researchers.
Slowly a set of blogs on this and related topics is appearing on Sonogy Research's blog as well.
Digital has several challenges. IMNSHO, bit depth is not at the front of the line.