The folks at Digital Theater Systems (DTS) have developed a lossless surround-sound format known as DTS-HD Master Audio. DTS-HD is available on Blu-ray discs and players, and can provide (to begin with) up to 7.1 channels of lossless surround sound when it’s used with one of these discs. With a lossless format, the sound being encoded comes out of your home theater system the same as it went in, without data loss.
There are two variants of DTS-HD:
DTS-HD High-Resolution Audio: This format is roughly equivalent to Dolby Digital Plus, providing a compressed but higher-resolution surround-sound format with up to 7.1 channels of 96 KHz, 24-bit surround sound. It’s used on Blu-ray discs when there isn’t enough space on the disc for the uncompressed Master Audio format.
DTS-HD Master Audio: This is the top dog of DTS audio formats, and can be thought of as DTS’s equivalent to Dolby’s TrueHD. Master Audio provides up to 7.1 channels of uncompressed surround-sound audio.
DTS-HD has the great feature of being backward compatible with older variants of DTS. So although you need a DTS-HD decoder to gain the full benefits of the lossless encoding that DTS-HD provides, you can still get great sound with your existing gear.
In fact, a DTS-HD-encoded Blu-ray disc — when connected to an existing DTS-capable receiver — will be able to send a relatively high bit rate (1536 Kbps) surround signal to any existing DTS receiver. And although this same bit rate has been used on hundreds of conventional DVDs, this is about twice the bit rate of the average DVD using DTS encoding, providing a good boost in sound quality. When you have a DTS-HD decoder in the loop, you’ll get great lossless decoding and superb sound quality.
Both variants of DTS-HD require an HDMI 1.3 connection and a receiver with a built-in DTS-HD decoder if you want to decode the high-resolution surround sound inside your receiver. Without those two features in your receiver, you’ll need to use the DTS-HD decoder inside your Blu-ray disc player, along with either an HDMI 1.1 connection (for linear PCM) or a set of analog audio connections.
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Source:http://www.dummies.com/how-to/content/dtshd-surround-sound.html
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