The sine signal generator provides an electrical test signal that we want to convert into digital first, and then back into electrical for verification. The clock drives the A/D converter and sets the sampling rate.
The dynamic range of the A/D converter is set equal to the amplitude of the sine wave. The number of bits used to quantize the electrical signal controls the buffer depth of the logical signals.
The number of bits is set equal to 6 that should be realistic for the current digital signal processors, which one can improve by using a scheme shown in Figure 4.
Figure 2 shows input sine wave (left) and the output signal (right) sampled at 40 samples per period and quantized with 6 bits.