Ogg Vorbis is a lossy codec, meaning audio quality is lost whilst compressing. How much is lost depends upon bit rate used, higher bit rates will produce audio sounding closer as the original.
Ogg Vorbis is comprised of two parts, Ogg is the container whilst Vorbis is the compression format.
Compression Options
Ogg Vorbis offers 3 types of encoding:
Quality Target Variable Bit Rate (VBR) VBR files are made up from small audio chunks, called frames. Whilst encoding VBR, the encoder decides which bit rate to use for each frame. Bit rates can drop down to lower values when it is warranted (if
there is not much sound complexity) and switch up to a higher bit rate when required. VBR files should be used when encoding unless there is a specific reason not to,
Average Bit Rate (ABR) a little like VBR except constraints are placed on Bit Rate so that over time it averages out to the desired value,
Constant Bit Rate (CBR) a constant bit rate is used throughout the encoding process.
Frequency number of samples per second to be encoded, [as source] allows the output frequency to be set the same as the input frequency (recommended).
Channels:
Stereo two channels of sound, enables instruments to appear separated from one another
Mono a recording with only a single channel of information
[as source] sets the channels to match the input channels (recommended)
Codec Background
Founded by Christopher 'Monty' Montgomery as an alternative to mp3 in 1998, free from patents and open source. Formed into Xiph.ORG foundation. Ogg Vorbis has its own Tagging format and container format.
Ogg Vorbis saves tags using Vorbis Comments, these are present at the beginning of the file and allow Unicode tagging.
Vorbis Comments are not limited to fixed fields, but a lack of standardized extended tag values (such as ratings, etc) limit Vorbis Comments.
Terminology
Encoding: compress and write audio track, Decoding: uncompress and read the track, ID Tags: meta data such as artist & album are embedded inside the audio file, Lossless: compression without audio quality loss, Lossy: audio quality is sacrificed (how much depends on bitrate and codec used) to achieve smaller files, Gapless: allows the decoder to decode audio stream without gaps (silence).