"I've digitized the key and stored it in the backpack."
Digitizing is one of the actions that B-12 can do with objects. With digitizing, you can take Items into your inventory, then show them to other characters, put them on, give them away or put them away. B-12 uses this function every time he needs to perform an action with an item.
It is not known for sure what physical processes are involved during digitizing, because this mechanism is not explained in the game. Every time an object needs to be taken in or taken out from the inventory, it glows blue, dissolving in the air. The small storage to which the digitized item is sent is located in the cat's Backpack.
It is also unknown whether the Companions are able to use this mechanism. One of the theories says that they use it for eating and drinking, since in the Nigntclub you can see that they can drink cocktails and the amount of drink in a glass decreases, even if the Companions do not have a physical structure that allows them to consume drinks.