Digitization is the process of converting analog signals into digital code. While digitization has been used before in many products (such as to transfer vinyl records to CD and VHS tapes to DVD).
How does it work?
Digitization requires both hardware and software dedicated to digitizing a subject. The hardware in this case, is a powerful laser. The digitization system was designed at ENCOM by Dr. Walter Gibbs.
Digitization Warp
It takes several minutes to warm up the laser and prepare it for digitization and black goggles must be worn to avoid looking into the beam's bright light. When primed, the laser shoots at the predetermined target and begins to split its molecules into a digital code, which is shown as billions of cubes. Each cube is quickly extracted one by one and sucked into the laser beam and will stay suspended in the beam until the model is played back, at which point the molecules fall back into place and the target returns to its analog form.
In Tron 2.0, it was revealed that the software used for digitization in 1982 turned out to be the MCP. After the MCP was destroyed, the correction algorithms (which were used to correctly digitize a human without corruption) were destroyed as well. Because of this, it took 20 years to recreate the correction algorithms, which were embedded into Ma3a's code. This information has since been removed from canon.