Connections & formats
PCM
Also called pulse-code modulation, linear PCM, LPCM
PCM, pulse-code modulation, is the standard way of representing digital audio: the waveform is measured many thousand times a second and each measurement stored as a number. CDs, WAV and FLAC files and nearly all streams are PCM.
Two numbers describe a PCM stream: the Sample rate, such as 44.1 kHz, and the Bit depth, such as 16 bits. Everything from CD quality to 24-bit/192 kHz hi-res is PCM at different settings. Compressed formats like MP3 and AAC are decoded back into PCM before a DAC sees them; FLAC is PCM packed losslessly.
The main alternative is DSD, which stores a one-bit stream at a very high rate instead of multi-bit samples. Most DACs convert DSD to PCM internally or handle both; the audible difference between the two, given a good master, is contested.