Digital signal
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A digital signal is a signal that has been quantized from a discrete signal. By quantizing the signal, the values of a discrete signal are no longer continuous but discrete.
In most applications, the digital signal's quantization is measured in bits. For example, compact disc audio is signed 16-bit stereo audio sampled at 44.1 kHz, which means each second of CD audio requires 16*2*44,100=1,411,200 bits.
The Digital Revolution
Because of the Digital Revolution, the usage of digital signals has increased significantly. The entire Internet is a network of digital signals and mobile phones have migrated from analog signals to digital signals. Dial-up access to the Internet uses standard analog telephone lines which has increasingly been replaced with broadband internet access, which use higher-bandwidth lines that are used strictly in digital means (i.e., an ADSL line is never used for voice communications).
Digital signal processing
Digital signals are the basis of digital signal processing. Digital signal processors take digital signals as input and output. Though, an input can be "attached" to an analog-to-digital converter or the output can be "attached" to a digital-to-analog converter thus allowing a digital signal processor to work in mixed-signal circuits.