"Digital" is used as the opposite of "Analog". Both are ways of doing calculations or logical decisions in a machine. And both can use various technologies, such as electronic, electric, mechanical, pneumatic, hydraulic, and probably others.
An analog type of system uses a physical representation of a value or state. And this representation can, in theory, have an unlimited level of resolution. So, using a mathematical device, an old fashioned slide rule can be set to any place along it's scale. There is no theoretical limit on where it can be set within it's range. However it's accuracy is limited by real world considerations in setting or reading these values.
A digital system uses numbers to represent a value or state. These numbers can be of any base (10, 2/binary, 8/octal, 16/hexadecimal, etc.) There are ways to work around this, but in general, a digital system will be limited to a certain number of digits in the number system that it uses. So the accuracy of most digital systems is limited by the number of digits and the number of those digits used in the base that is selected.
Although it may sound like digital would be more limited in accuracy, often it is the better of the two. Analog is usually limited by the ability to either set or read out an analog value while digital allows any number of digits to be easily entered or read out.
But then, it should be remembered that most digital systems rely on conversions from and/or back to analog. Only the calculations or decision making is done in the digital realm.