Summary:
Dolby Digital is the common version containing up to six discrete channels of sound. The most elaborate mode in common use involves five channels for normal-range speakers (20 Hz – 20,000 Hz) (right front, center, left front, rear right, rear left) and one channel (20 Hz – 120 Hz allotted audio) for the subwoofer driven low-frequency effects. Mono and stereo modes are also supported. AC-3 supports audio sample-rates up to 48 kHz. The Laserdisc version of Clear and Present Danger featured the first home theater Dolby Digital mix in 1995.
Information: Wikipedia
Purpose:
If you run DivX Video files, you need it for sound encoded into the AC-3 format. This is the most popular audio codec for DivX and Xvid Video files.
Compatibility