Digital is not stepped.
When your audio is in digital format it is basically a large number of samples, i.e this volume at this point in time, not this volume until the next sample. They are points on a graph, not blocks.
When you play back your digital audio it is converted back to analogue, ie a smooth curve. If you input a pure sine wave into a computer's ADC and then output it through the DAC, you get a pure sine wave. No steps are anywhere to be heard.