Codec

To rip a CD is transforming its content (16bits/44.1 kHz PCM audio) too an audio file format.
Playing this file is transforming the content back to PCM audio.
The conversion is done by a codec.
A codec (COder-DECoder) is a program doing the coding/decoding.

The discussions on audio forums about the pro and cons of different file formats are endless.
Some claim that they hear differences between different lossless formats like WAV and FLAC.

Computer audio is MP3 most of the time.
There are many MP3 codecs available.
You can find many reviews comparing them.
A lot of this information is outdated.

Today the differences are very small.