Atmel describes how to enhance ADC resolution by oversampling the signal and averaging the extra data. This has a side effect of increasing the signal to noise ratio, and reducing the quantization error.
When the ADC samples a signal, it quantizes the signal in discrete steps. This introduces some error, often referred to as quantization error. Normal averaging will only even out signal fluctuations, while Decimation will increase the resolution. In a 4- times-oversampled signal, four adjacent data points are averaged to produce a new data point. Which frequency to oversample the signal with, can be calculated by equation 3-1.
Adding these extra samples and right-shifting the result by a factor n, yields a result with resolution increased by n bits. Averaging four ADC results to get a new ADC result is the same as if the ADC sampled at ¼ of the rate, but also has the effect of averaging the quantization noise, which improves SNR. This will increase the ENOB and reduce the quantization error. With the availability of faster ADCs and with low memory cost, the advantages of oversampling are cost effective and desirable