Confusion with modulation/demodulation
To reconcile your (correct) understanding about modulation with the book, let me restate 


  modulation modifies a signal in a way that is able to carry
  information


as


  modulation modifies a carrier signal in a way that is able to carry an
  information signal


Now in PCM, the bitstream is the carrier signal, and the "analog signal" he refers to is the information signal. Does this make it clearer?