I hope this answers your questions:
Let’s see:
Audio dithering is the intentional application of low level noise to an audio file. The process of audio dithering helps to remove quantization distortion that occurs when reducing the bit depth of an audio file.
Quantization is the process of converting an analog audio signal into a digital signal. Quantization digitizes a continuous waveform into a series of individual amplitude levels—it converts audio into a format a computer can understand.
The process of reducing the bit-depth of audio (i.e. downsampling) however, results in quantization errors and distortion.
When you reduce the bit depth from 24-bit audio to 16-bit audio, for instance, there are fewer steps, or snapshots available to reconstruct the original waveform’s amplitude values. As you downsample to 16 bits, quantization distortion starts to get rather noticeable in reverb tails, fade-outs, and quiet moments.
Dithering actually improves the audio quality of lower resolution audio by removing quantization distortion and replacing it with white noise. By applying noise, dithering turns the harsh, inharmonic distortion of quantization errors into a low-level, analog-like hiss. The noise in the signal slightly randomizes the amplitude levels of the original signal, thereby removing the distortion and actually retaining very low signal levels which otherwise would quantize to pure silence.
As you can see, there are several things to consider when going from a higher bit depth, such as 24, to a lower one, such as 16. In this case, and specially if you’re planning to use a lossy format afterwards (mp3), it’s important to pay attention to the ISPs or/and use dithering. This is debatable, however - hence the “loudness wars” thing (which is pretty stupid imo).
Also, dithering affects mp3 in a very specific way (check the timestamp I left). Notice how Reaper greys out the dithering option when rendering MP3:
But what if you do the opposite?
Well, basically nothing.
If you have a 16 bit audio file and convert it to 24 bit, you’ll simply get more headroom! The new bits are simply filled with zeroes, with no noticeable changes.
