Advanced features depend on digital but conserving bandwidth does not. Three conversations get handled on a single frequency. Call capacity increases. No, it is a virtue of multiplexing. A digital signal does not automatically mean less bandwidth, in fact, it means more.
Multiplexing means transmitting multiple conversations on the same frequency at once.
In this case, small parts of three conversations get sent almost simultaneously. This is a good place to pause now that we are talking about digital. AMPS is a hybrid system, combing digital signaling on the setup channels and on the voice channel when it uses blank and burst. Voice traffic, though, is analog. As well as tones to keep it on frequency and help it find a vacant channel.