When you "digitize" something, you convert it from analog to digital. For example, if you import a VHS tape from a VCR into your computer, you might use an analog-to-digital converter (DAC) to convert the analog signal to a digital stream of data. This is because computers are digital devices and can only read digital data.
Digital files are created by taking samples of analog data, typically at the rate of several thousand per second. For example, a sampling rate of 44.1 kHz, which is what standard audio CDs use, indicates that the audio is being sampled 44,100 times every second. Therefore, the higher the sampling rate, the better the quality of the digitized file.
Because digitizing analog data is done by sampling sections of data, the end result is really an estimation of the original data. However, as long as a high sampling rate is used, our ears and eyes perceive digitized audio or video as a steady stream of analog data. Because digital data can be edited by computers and can be endlessly copied with no loss of quality, most of today's audio and video media are created in a digital format.
For more information about the difference between analog and digital data, view this Help Center Article.