Pulse code modulation (PCM) is a technique used to convert analog signals to digital data. It is a 3-stage process: 1) sampling the analog signal at regular intervals, 2) quantizing the sampled signal to discrete levels, and 3) encoding the quantized samples as digital code. PCM is commonly used for digitizing audio in applications like digital telephony, compact discs, and computer audio because it allows analog signals to be transmitted over long distances efficiently in digital form while maintaining good signal quality.