This article is from the CD-Recordable FAQ, by Andy McFadden (firstname.lastname@example.org) with numerous contributions by others.
Digital audio CDs are superior to audio cassettes and 8-track tapes, and
digital video DVDs are superior VHS videotapes. However, the analog film
shown in a movie theater is superior to DVD, and the analog studio master
tape is better than an audio CD. The sounds that an Apple II makes are
generated digitally, but you wouldn't want to play your CDs that way.
Some formats are better than others. The low-cost consumer digital formats
are generally superior to low-cost consumer analog formats (except perhaps
for 35mm film, though that's changing). This does not mean that "digital"
is better than "analog", though many people have that impression because
the consumer electronics companies are marketing products that way.
Digital has some advantages over analog. The most significant is the
ability to apply various algorithms to reproduce the original digital signal.
With most forms of analog transmission, reconstructing the original signal
without noise and distortions is difficult. The flip side is that, with too
much interference, the digital signal becomes unusable. NTSC televisions
(the kind used in North America and Japan) can display a transmission with
a negative S/N ratio, i.e. there's more noise than signal. (If you're not
part of the "cable TV" generation, think about a picture that was heavily
snowed, but still decipherable. It was probably a sporting event.)
Digital also has disadvantages, although many of them can be minimized
through careful system design. The most fundamental problem is the need
to convert the digital signal back to analog. Human senses are analog,
so audio has to be converted to voltages that drive speakers, and video
needs to be turned into pixels on a screen. The human eye is pretty easy
to fool -- update the image quickly enough and the brain will believe the
motion is smooth -- but the ear is more discerning. Slight changes in
frequency and timing, especially in a stereo signal, can be detected.
Many digital formats are compressed with "lossy" techniques. Algorithms
like MPEG-2, MP3, DTS, and SDDS remove parts of the music to reduce the
storage size. The parts removed are usually inaudible, though that depends
on how much is removed and how good your ears are.
The upshot of all this is that it's wise to pay attention to what you're
getting. Don't assume that a digital format is better just because it's