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The distinguishing feature of amplitude modulation (AM) is that it varies the amplitude of the carrier wave to encode information. In amplitude modulation, the strength (amplitude) of the carrier wave is altered in proportion to the audio signal being transmitted. This means that when there is a sound or signal to transmit, the height of the wave increases or decreases accordingly, which is how the information is conveyed during AM transmission.

In contrast, frequency modulation (FM), which is not the correct answer, changes the frequency of the carrier wave while keeping the amplitude constant. Therefore, the key difference lies in how the original audio signal influences the carrier wave; AM affects amplitude, while FM affects frequency.

While it may be noted that FM can have advantages such as greater noise immunity and can offer a longer range in certain conditions compared to AM, these aspects do not define the basic operational mechanism of modulation types. Thus, the specific technical aspect of how AM works—varying the amplitude of the carrier wave—is the reason why this response is accurate.