Telephone lines were designed to carry the human voice, not signals from a computer. So modems were invented to convert digital computer signals into a form that allows them to travel over the phone lines. Those are the scratchy sounds you hear from a modem's speaker. Believe it or not, there actually is meaning in all that noise. A modem on the other end of the line can understand it and convert the sounds back into digital information that the computer can understand.
Modulation is the conversion of data from binary to analog and demodulation is the reverse process.
So when you send a file from your PC to another, it is converted to an analog signal by your modem and converted back to binary when it arrives at the destination by the modem connected to that computer. Most modems today are capable of sending and receiving faxes. These modems are called Fax-Modems. Most manufactures supply the software for their modems. Windows 95 has its own modem utilities including utilities for sending and receiving faxes.