Sony/Philips Digital Interface
SPDIF is a digital interface for connecting digital audio devices, originally created by Sony and Phillips for transmitting data read by the CD player.
With this interface you can connect two digital audio devices using a digital connection, meaning no noise.
For example, to connect a MiniDisc deck to your PC for recording musics that you created on your computer, you have two choices. To connect them using standard analog connection (“line out” and “line in” plugs) or using digital connection (SPDIF).
Nowadays the most common use of SPDIF connection is between your PC or your DVD player and your home theater receiver.
In order to use this connection, your PC must have it, of course. Low-end sound cards and motherboards don’t carry this feature. Some motherboards have SPDIF connection but you need to install an I/O bracket to use it. For more information on that, read your motherboard manual.
SPDIF connection can use a coaxial plug, using a coaxial cable, or an optical plug, using fiber optics. Fiber optics provides the best transmission quality.

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Figure 1: Optical and coaxial SPDIF plugs on a PC.

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Figure 2: Optical and coaxial SPDIF plugs on a home theater receiver.