QAM

QAM (Quadrature Amplitude Moduation)- The Quadrature means two-axis, 90 degrees from each other.
Much like color we have an I (In-phase) and a Q (Quadrature) components.
QAM is a form of compression. Here with 16-QAM, every clock cycle we can send a signal pulse that represents one of 16 states.
As you can see at the top it takes four bits to convey 16 possible states.

QAM
Here you can see we can specify the I and Q values by where in a clock cycle the pulse occurs, and one of two positive or negative (4) amplitude values.
Where in the cycle (the phase) represents the I value and the amplitude represents the Q value.
Each clock cycle is called a baud. So 300 baud (cycles per second) with 16 QAM can convey 4800 bits.

If we divided each cycle or baud into 8 phase positions and allowed for four positive and four negative values (8)
we could convey one of 256 values per baud - 256 QAM. That would be one 8 bit byte per baud.

Finally notice that the bottom graphic looks very analog in nature.
While we are in a very digital world, at the lowest levels, especially when sending digital signals between equipment we still revert to analog techniques.