The Downsample effect changes the number of bits required to represent a single sample in a sound.
You can only do this on the whole document, not just on a selection or on a few channels.
Usually, you will want to downsample from 16 bits to 8 bits, to save disk and memory space for a small decrease in sound quality.
You also have the option to downsample the sound using Dither, Rounding or Noise Shaping: these are techniques that reduce the distortion caused by the downsampling process.
