Since Sean has confessed his error, I will do the same. My explanation actually showed a ramping signal of 3 units in four samples. While this was not incorrect, it is not consistent with the analog signal that I assumed at the beginning. The following is an updated version of my explanation, for posterity.
Phillips used 4 times oversampling in their first CD players so that they could achieve 16 bit accuracy from a 14 bit D/A. At that time, 16 bit D/A, as used by Sony, were lousy, but the 14 bit units that Phillips used were good. The really cool part of the story is that Phillips didn't tell Sony what they were up to until it was too late for Sony to respond, and the Phillips players ran circles around the Sony ones.
In Sean's explanation the second set of 20 dots in set B should not be random. Those dots should lie somewhere between the two dots adjacent to them.
Here is my explanation.
Assume there is a smoothly varying analog waveform with values at uniform time spacing, as follows. (Actually there are an infinite number of in-between points).
..0.. 1.. 2.. 3.. 4.. 5.. 6.. 7.. 8.. 9.. 10. 11. 12 etc.
If the waveform is sampled at a frequency 1/4 that of uniform time spacing of the example, (44.1 KHz perhaps) the data will look like the following:
..0............... 4.............. 8...............12..
THIS IS ALL THERE IS ON THE DISC.
A D/A reading this data, at however high a frequency, will output an analog "staircase" voltage as follows:
..000000000000000004444444444444444488888888888888812
But suppose we read the digital data just four times faster than it is really changing, add the four values up,
and divide by 4.
First point
..(0+0+0+4)/4 = 1
Second point....(0+0+4+4)/4 = 2
Third point.....(0+4+4+4)/4 = 3
Fourth point....(4+4+4+4)/4 = 4
Fifth point.....(4+4+4+8)/4 = 5
Sixth point.....(4+4+8+8)/4 = 6
Seventh point...(4+8+8+8)/4 = 7
Eighth point....(8+8+8+8)/4 = 8
....And so on
Again we have a staircase that only approximates the instantaneous analog voltage gererated by the microphone when the music was recorded and digitized, but the steps of this staircase are much smaller than the staircase obtained when the digital data stream from the disc is only processed at the same rate that it was digitized at. The smaller steps mean that the staircase stays closer to the original analog continuously ramping signal.
Note also that we are now quantized at 1, instead of 4, which is the quantization of the raw data stream obtained from the disc. A factor of 4. Thats like 2 bits of additional resolution. Thats how Phillips got 16 bit performance from a 14 bit D/A.