96
stored value Q
4
quantization error I − Q
31.875
step size dI

Smooth ramp, before quantization
Same ramp stored with L = 8 levels

Drag L down to 8 or 4 and the ramp breaks into visible bands. Push it to 256 (true 8-bit) and the step size falls to about 1 unit, which is where the error drops below what your eye can see.