Encoding is the final step of analog-to-digital conversion: representing each quantized sample as a string of bits. With allowed quantization levels you need bits per sample.
Take 256-level audio. Each sample is one of integers , requiring 8 bits. The encoder writes those 8 bits out in some agreed order — most-significant first or least-significant first — and the result is a serial bit stream representing the original signal.
Two reasonable conventions
There is no single “correct” encoding; the only requirement is that the transmitter and receiver agree. Common choices are unsigned binary (level binary representation of ), two’s complement (allowing negative numbers), and Gray code (consecutive levels differ in only one bit, reducing the cost of single-bit errors). See Character Representation, 2’s Complement Arithmetic.
Back to a voltage waveform
If we represent the encoded bit stream as a voltage waveform (say 0 V for a 0 and 5 V for a 1), we are back in continuous time but with only two values — the bottom-left box of the four-kinds-of-signal table from Signal. The string of pulses can be sent through any binary channel: a wire, an optical fiber, a radio link.
Where this fits
Encoding completes the conversion chain:
Once we have bits, the communications chapter of the story takes over: how to ship them through a noisy channel and recover them at the other end.