Let us assume the PID control loop is invoked at 20Hz (20 times per second). Let us also assume the encoder disk has 1000 transitions per revolution. At a very low speed, such as 0.1 revolutions per second, we only get 100 ticks per second. This is divided by 20 because the sampling frequency is 20Hz. As a result, we only have, on the average, 5 ticks per period.
The error term is going to be even more quantized because it is the difference between the set point and the feedback. As a result, the control signal has very poor resolution because it depends on the error term.