It took a long time for me to work up any enthusiasm for the original digital consumer format, the CD. Coming from an all-analog perspective, first-generation CDs and CD players in the early 1980s didn't light my fire. The problem wasn't that they sounded "bad," it was that CDs robbed music of its soul and emotional connections. LPs' sound engaged you; the CD's sound was too easy to ignore. People put music on, and started reading, talking, working, anything but actually listening to music.
That's why I waited six years to buy my first player, when the players and discs were much improved. Mind you, CDs were from the get-go uncompressed digital, but that didn't help matters. Six years later the CD was the same as it ever was, but the analog-to-digital converters used in recording/mastering, and the CD players' digital-to-analog converters were much improved. That's where most of sound improvements came from.
By the early 1990s recording engineers and producers' aesthetic had evolved; they learned how to get the best sound out of digital. CDs were sounding good; not the same as analog, not by a long shot, but the CD was good enough to be embraced by the majority of audiophiles.
By the early 2000s the loudness wars started to erode digital's quality gains. The CD format was still unchanged, but the record companies were determined to crush the soft-to-loud dynamic range of live music down to almost nothing, so the sound was "loud" all the time. Dynamic range compression was all the rage, but the CD format's data was uncompressed.
In other words, while the format was the same as it ever was, the music's soft-to-loud dynamics were smashed flat before they were encoded to the disc. So by the time people were bemoaning the nasty sound of lossy MP3s, the recordings' sound quality was already compromised. And if anything, it's even worse now. If the original recording sounds bad, the potentially better-sounding release formats--CD, FLAC, and LP--can't sound any better.
When the record companies again allow engineers and producers to make the best-sounding records they can, we might start to really hear great sound. But listening to a recording as a FLAC or Apple Lossless file can't undo dynamic range compression or overzealous equalization. Sure, some good-sounding recordings are still being made, but the overall quality levels are low.
So while lossless audio compression (FLAC or Apple Lossless for example) can be "expanded" to produce an exact digital duplicate of the original audio stream, that's not necessarily the same thing as sounding exactly like an uncompressed WAV file or a CD. To my ears lossless files add a glare or edge to the music and flatten the soundstage. Please don't misunderstand, I think FLAC or Apple Lossless sound perfectly fine, just not on par with a CD, when played on a high-end audio system.