Every digital file has a word width, and going from a wider one to a narrower one throws away the bits that do not fit. What separates a good conversion from a bad one is what happens to the part that is thrown away.
The grid
At 16-bit there are 65,536 possible sample values. A sample that falls between two of them has to become one of them, and the difference is the quantisation error.
If the sample values are simply rounded, that error is a deterministic function of the input, which means it is a distortion of the signal rather than noise added to it. On a fade to silence, the distortion is what you hear last.
Dither
Adding a small amount of noise before rounding breaks the relationship between the signal and the error. The error becomes noise, which is far less objectionable than distortion at the same level.
Rectangular dither is one quantisation step wide and fixes the average error. Triangular dither is the sum of two rectangular sources, two steps wide, and fixes the variance as well. That last part is what stops the noise floor from moving with the music, and it is why triangular is the default here and in every mastering chain.
The dither level control exists for the rare case where you want less than the textbook amount. Below about -6 dB the dither stops fully decorrelating the error and you get a mix of noise and distortion.
Noise shaping
The quantisation error can be filtered before it is fed back, which moves the noise energy up in frequency. The total noise gets louder; the noise where the ear is sensitive gets quieter.
Light is a gentle second-order tilt that is safe at any sample rate. Heavy is the Lipshitz E-weighted curve, which buys the most perceived resolution and puts a lot of energy above 15 kHz.
Shaped noise only stays shaped until someone processes the file again. Use it on the last step before delivery, not in the middle of a chain.
Getting the depth into the file
Quantising the samples is only half the job. The encoder that writes the file also picks a word width, and if it picks 16-bit after the step has carefully placed everything on the 24-bit grid, the work is undone on the way out.
This tool quantises to exactly the grid the PCM encoder will use, and locks the export to the matching WAV codec, so the encoder’s own rounding changes nothing. Check the result in the metadata viewer: the header should report the width you chose.
8-bit
The grid is 256 steps and the noise floor is around -48 dBFS, so dither is not subtle here. It is a sound rather than a format choice, which is the honest reason to reach for it.