Codec
Definition
Short for "coder-decoder." An algorithm that compresses audio data for storage or transmission and decodes it for playback. Different codecs make different trade-offs between file size, quality, and compatibility.
In Simple Terms
The recipe a computer follows to shrink an audio file for storage or streaming. MP3 and AAC throw away some data to make files smaller. FLAC keeps everything but still compresses. The codec determines what your listener actually hears.
Common Confusion
The container (MP4, MKV, MOV) determines compatibility and metadata structure; the codec (AAC, MP3, FLAC) determines the compression algorithm and audio quality. An MP4 container can hold audio encoded with AAC, MP3, or other codecs.