Arny and I obviously agree about the resolution issue. I believe Arny
is cvorrect, but I make no claim to infallibility, so I'm very
interested in the opposing points of view as well.

Having no tech expertise, I'm going more on intuitve logic. Let's use
reductio ad absurdum (or whatever it's called!). Let's take a 1 bit
system. Now we have only two volume values: full volume, and full
silence. using the 6dB per bit formula, we have values of 0dB and 6
dB. (I'm not using full scale dB, obviously, for this purpose). Now
let's assume a 2 bit system. Now we have inserted two intermediate
steps between the on and off. And we've also increased the dynamic
range by 6 dB. This would give us values of 0db, 4 dB, 8 dB, and 12
dB. (For the sake of argument, let's assume a linear system in terms
of dB values. For all I know, it might not be.)

So what has happened? Yes, we have increased out dynamic range by 6 dB
between the loudest and softest signals the system can represent. But
we have increased the resolution throughout the system: from a 6dB
increment to a 4 dB increment.

Continuing to a 3 bit system: dynamic range is 18 dB. Values are 0dB,
2.25 dB, 4.5 dB, etc. to 18 dB. Wth each additional bit the dynamic
range is increasing, but ALSO the resolution is increasing everywhere
in the system.

Now, my logic may well be flawed, so I'm most interested in finding
out where the flaw is. This is a great way to learn, and i thank
everyone who is teaching me!