When working with digital audio it is important to understand the difference between 'codecs' and 'wrappers'. The term codec refers to the algorithm used to encode and decode the raw audio data whereas the wrapper (or container) is the file format that wraps the raw audio data along with other data such as metadata or album artwork images for example.
Codecs can be uncompressed (such as Linear PCM), lossy-compressed (such as MP3) or losslessy-compressed (such as FLAC). Selecting an appropriate codec is important as it has an effect on how much raw audio data is retained. Uncompressed and losslessy compressed will retain the original audio data whereas compressed codecs irretrievably lose audio data from the outset. A side effect of lossy audio data compression is the introduction of anomalies in the spectral and time domains. Compressed formats are therefore not suitable for archival purposes or for projects where audio fidelity is important.