What is Code Coverage and how does it impact Software Quality?

I would like to take second question first: Code coverage is considered as an extended step towards ensuring good quality of the software by indirect means. Why I explained it in this way?

In my opinion Code coverage is more about assuring quality of test-cases and finding redundant code, not about quality of actual product we are developing. Realistically its very difficult to do Code coverage exceises with actual testing. So normally teams Quality Engineers try to find out the cases they need to add and test-cases which does not help in improving the coverage.

You may not agree, as its my personal opinion.

Now lets come to first question about what it is?

Code Coverage is methodology to:

1.  Find different program areas not excercised by Testers through pre-identified set of Test cases.
2. Add new test cases to increase coverage in terms of Functional/Statement/Decision/Conditional-coverages
3.  Identify overall gap between the actual coverage and targetted coverage. Its more about statistics which helps a Quality engineering team to know about the other quality measures of a Software.
4. To identify redundant test-cases which have 0% contribution in coverage increase.

Most of the times last point is not considered but we should not forget that its also a wastage of resources/time when we run redundant test-cases which adds no value.