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From iA wiki
See also: Audio Formats
Acronym: Advanced Audio Coding
An audio compression format developed by Dolby Laboratories, Inc. and accepted by the MPEG AAC Standard to make music and other audio files smaller. The format can encode and decode Dolby's 5.1 surround-sound at as low as 128 bits per second.
This previously unpopular audio codec is now the choice of Apple Computer's music service. However, it has some restrictive for-pay licensing terms. It is, therefore, not recommended for individuals encoding their own original music.
AAC also has been shown in tests not to be the Best Compressed Audio Format. How it got to be the MPEG AAC standard is a mystery. However, it was chosen by Apple possibly because of the popularity of Dolby and other surround-sound equipment and/or higher-end audio on Apple computers.