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Optical out questions

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Can someone enlighten me on optical output to an external processor?
To my limited understanding the deck sends a direct digital signal from the source to my processor. So for a cd the deck would read the 1's and 0's and transmit them with no decoding.

So my question is would there be any real difference in head units that have optical ouputs? I could see maybe if one HU could send 24 bit signals and another only 16. But aren't standard cd's recorded at 16bits?

I appreciate any guidence.

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