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Another question got me thinking about what is limiting dynamic range in digital cameras. From my understanding the precision of the analogue-to-digital converter, i.e. how many discrete levels it can distinguish, would be the major limiting factor. Is this correct? What are the other factors?

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No. This is like saying you can determine the height of a house by counting steps to get up. The size of steps matters and so does the number.

Dynamic-range should be determined by the well-depth (size of capacitors at a photosite) and noise floor (how much noise in the system when these is no signal). Knowing these two, one can compute the dynamic-range of a camera with good accuracy. Improving either will also improve the dynamic-range a camera can capture.

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    To add to that in more layman's terms, you need to be able to capture bright things and dark things at the same time. Noise occurs around dark things though, so you have to have low noise to keep the dark pixels usable.
    – AJ Henderson ♦
    Jan 5, 2014 at 19:04

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