Digitizing is the step where a picture becomes a set of needle instructions. Each file is planned for the garment it will actually sew on: stitch type, direction, underlay and order.
An embroidery machine has no idea what your logo is supposed to look like. It follows coordinates: move here, drop the needle, cut the thread, change color. Every quality issue on the finished garment traces back to how those instructions were written.
Auto-digitizing software converts shapes into stitches without judging fabric, size or sewing order. The result often looks fine on screen and then puckers, gaps or snaps thread on the machine. Manual digitizing puts those decisions in the hands of someone who knows how fabric moves under a needle.