Ogg Vorbis
From Linux 101, The beginner's guide to all things Linux.
Ogg Vorbis is a music file format like an MP3. It breaks down into two pieces.
Ogg is an audio container. It is the part that actually stores the sound that is to be played. This is also why the ogg files extension is .ogg .
Vorbis is a compression technique (algorithm) that is applied onto the Ogg part. There are many different compression techniques. Some are better for internet telephony (using your microphone over the network) and so forth. Vorbis is the best for music. This means that you will see other formats, like Ogg Speex, Ogg FLAC, etc.
There is a unique difference between an MP3 and an Ogg Vorbis. When you encode an MP3, or create from an uncompressed format such as WAV files, you select a data rate usually in the range of 64kbps to 384kbps and it stays constant throughout the music file. Some encoders do support a variable data rate that will switch between data rates depending on the audio level of the song (quiet parts use lesser data rates; louder use higher). Depending on the quality of the encoder, however, this does not always perform adequately, because some parts of the song may be loud enough that they surpass your data rate and then there is noticeable quality loss.
Ogg vorbis encodings do not choose a data rate, but rather a quality level from 1 (lower) to 10 (higher). A quality level does not directly associate to a data rate, but it approximates. If the song is quiet, it will use a lesser data rate. If the song gets loud, it will use a higher level. Think of quality levels as a suggestion, whereas data rates are preset maximums.
Generally speaking, Ogg Vorbis's are smaller files for the same quality of audio. This is always a nice space saving feature. A Quality level of 4 is roughly equivalent to 192kbps. This demonstates that a lower ogg vorbis is roughly equal to a higher MP3.

