All movies are recorded with several different audio formats or "codecs". Each codec is different and let's say encoded or encrypted. We need one of the components in our home theater system to be able to "decode or decrypt" these codecs so that we can hear the audio.
Onboard decoding refers to the ability of the player to "decode" the audio format. The audio signal can then be sent to your receiver and we hear the audio. (FYI: This is called Linear PCM.)
Bitstream, is used when the Player does not touch the audio...instead it is left in its raw form and sent to the Receiver, where it is then decoded by the Receiver.
I found a lot of great info at www.about.com
Start with Home Theater as a subject and read on...!
Can someone tell me what the terms onboard decoding and bitstream format mean. I don't know if I said those right, but if you can help me out I will be thankful.