lynes:
and this:
Website with more details:
https://bildr.org/page/18/
You are looking at the wrong image. The green arrow coming out of the bottom of the board is what you connect to your actual ADC input, as shown on the adjacent diagram:
Expand
In which case you are using the resolution of the ATmega328 ADC, 10 bits.
Note that these multiplexers are as raschemmel points out, a sort of "rotary switch". Amongst the things you have to take into consideration are the fact that the "switch" contains a series resistance of about 60 Ohms and various capacitances.