Although abbreviation PCM stands for Pulse Code Modulation, we are understanding it as general digital audio processing with volume samples generated in continuous time periods.
The analog signal is recorded via analog to digital converters (ADC). The digital value (de-facto a volume at a specific time) obtained from ADC can be further processed. The following picture shows a perfect sinus waveform:
Next image shows digitized representation:
As you may see, the quality of digital audio signal depends on the time (recording rate) and voltage resolution (usually in an linear integer representation with basic unit one bit).
The stored digital signal can be converted back to voltage (analog) representation via digital to analog converters (DAC).
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