Modulation is the process of varying one or more properties of a high frequency carrier signal, with respect to the message signal. Different types of modulation are: amplitude modulation (AM), frequency modulation (FM) and phase modulation (PM).
The need for modulation can be summarized as follows:
(1) Message signal or voice signal have low frequencies, and hence cannot travel long distances, so in order to make this possible we use the technique called modulation.
(2) The antenna needed for transmitting signals should have size at least λ/4, where, λ is the wavelength. The information signal, also known as baseband signal is of low frequency (and therefore the wavelength is high). If we need to transmit such a signal directly, the size of the antenna will be very large and impossible to build. Hence direct transmission is not practical.
(3) The radiated power by an antenna is inversely proportional to the square of the wavelength. So, if we use high frequency signals, the power radiated will be increased.
(4) If we transmit the baseband signals directly, the signals from different transmitters will get mixed up and the information will be lost.
Demodulation is the process of extracting the original information - bearing signal from a modulated carrier wave.