Signal is a physical quantity which convey information. Audible speech is a kind of signal that covey thoughts of one person to another through sound physical medium another example is Hand gestures are also signals too conveying information by means of light.
Analog signal is a continuous signal or wave denoted by a sine wave and vary with the signal strength or frequency. Amplitude’s value of sine wave can be seen as the higher and lower points of the wave. There are many real time examples of analog signal are: human voice is continuous so this is the example of analog signal .same as our vision, we see a perfect shape of any object because of the means of light. Working with these signals give results in small fluctuations. Advantage of analog signal is infinite amount of data with the easy processing and density is higher. Disadvantages are: If data is transmitted at the long distance then it contain unwanted disturbance in distorted way and unwanted noise is recording.
Digital signals are discrete signals having in a range of finite values is of either 1 or 0. To work with the digital signal is easier way as compared to analog. Example: a digital thermostat in a room display temperature 72° whereas analog thermostat display results like72.832° so the data in digital signal are more adequate for the application so as easier to process such data electronically. Working with these kind of signals are more reliable and accurate because it use the digital media and numeric method Advantages are: Transmitted over Digital lines because of the Digital nature, data transfer rate is better than analog. Disadvantages are: Greater band width is essential if you transmitting long distance data, system and processing is more complex because giving the round off results.
Lets take an example to understand the concept of modulation and demodulation and start with the basic object our telephone. When you speak in microphone then sound waves from our voice transmit through phone in form of radio wave which vary in frequency. Then analog signal from the phone travel into modem now there is a job for modem to demodulate those signals and covert them in digital signals and modulate them by reconverting those digital to analog signals.