In amplitude modulation, the envelope represents the slow-changing baseband signal that bounds the peaks of the high-frequency carrier wave. It visually traces the overall amplitude variations over time. Extracting this boundary shape is the primary method for recovering audio or data from an AM transmission.
If you look at the scope, the envelope is clipping on the negative peaks, which explains the audio distortion.
Related terms
Envelope detector
An envelope detector is a circuit that extracts the modulating signal from a carrier wave.
Modulate
To vary a property of a carrier signal in order to transmit information.
Signal processing
The mathematical manipulation of physical data streams to filter, compress, or extract information.