You're thinking of binary. Digital just means it's all fingers.
Yeah, Binary is two states. Digital, I think, is 'a finite number of defined states', so binary is digital but a system that could be in four states (eg. 0, 0.25, 0.5, 0.75 and 1) would also be digital. Analouge on the other hand has an infinite number of possible states (eg. an analouge sound recording can capture sound at any pitch, a digital one would presumably round the pitch to the nearest value the format supports). I think that's right.
On the content of Grayling's speech, I note the long list of road schemes at the begining and ask, as I have done elsewhere, whether the North-South transport funding divide is not actually about total government expendature but rather how it is spent. Is it the case that both London and the north have, to pick a figure out of the air at random, £10bn per anum spent on them but in London it is spent sensibly (on public transport) and in the north it is mostly wasted on roads leaving rail in the north under-funded?