The nasty truth underlying all digital recording techniques is that they turn analog signals into discrete samples of the original....The real world sports an infinite number of shades of blue in the sky and an endless amount of detail, but your digital camera only captures between 1000 and 4500 pixels of horizontal detail in perhaps thousands of shades of possible blues. While that’s pretty darn good, it does cause two resolution-oriented problems:
1. Detail smaller than the pixel size is usually lost.
2. Where transitions between details occur within the area of a single pixel, the transition usually results in a digital value that is neither of the original values.
This second problem is what makes details in your photographs look fuzzy.
The classic example is that of a diagonal transition line that transects a pixel. The pixel can either be white, black, or some in between value. If the camera were to render the pixel as entirely white or black, then you’d see an artifact known as the stairstep, so named because a diagonal line gets rendered as a series of pixel blocks that resemble a set of two-dimensional stairs. The alternative is to record the pixel as an "in-between" gray (which still produces a bit of a stairstep effect, but isn't quite as obvious). Neither case is correct, and both tend to reduce apparent sharpness.
All digital cameras use in-camera interpolation to detect edge transitions, and use some form of digital sampling to create “in-between” values for those diagonal lines. The result? Instead of a precise transition from one pixel value to another, diagonal details (and sometimes small horizontal and vertical details) are rendered as a more gradual transition from one color to another. Our brains have been programmed to see blurry or soft edges as being out-of-focus, thus unmodified digital photographs always tend to look just a tad soft. That’s even true of higher resolution cameras and scanners—film images I’ve had scanned on 4000 dpi drum scanners still look a little soft in the detail areas.
Worse still, most digital cameras employ what is known as an anti-aliasing filter--essentially a diffusion filter over the sensor. (The exception is the Kodak Pro 14n). Why? Because the Bayer pattern sampling used in digital cameras has a tendency to produce colored artifacts and moire patterns on small detail. By blurring the light slightly so that multiple photosites get some of the information from a particular detail, this lessens the chance that these hard-to-remove artifacts appear. Unfortunately, it also has a further tendency to make edges less distinct.
The primary reason why sharpening is required on digicams is that the Bayer interpolation introduces softening. The kinds of softening described in the article would be blocked by the lithium niobate anti-aliasing filters used in most DSLRs.