That's when it's used as a "bit crusher" effect by converting to 10/12 bit samples by simple truncation, rather than dithering (randomized rounding up or down t

That's when it's used as a "bit crusher" effect by converting to 10/12 bit samples by simple truncation, rather than dithering (randomized rounding up or down to the nearest quantization value, with P(round_up) = the relative closeness of the sample to the upper quantization value). With dithering, the only difference a smaller bit depth makes is a higher noise floor, with the noise being just background white noise (like tape hiss). With most pop music a 10 bit depth with dithering would likely not be audibly worse, since pop music is usually compressed into like the top 10dB of the dynamic range.