DSD (Direct Stream Digital) is a special digital audio format developed by Sony/Philips and is fundamentally different from the traditional PCM (wav) formats.
The sampling of the PCM system is usually 24bit/max. 384KHz. DSD uses a different kind of digitisation scheme: 1 bit/ max. 45.1MHz – this is called DSD1024. Recordings are usually made in DSD256. These numbers represent how many times the sampling frequency of a DSD recording is greater than that of a CD recording, 44.1kHz.
Is there a difference in sound between DSD and PCM?
Yes, there is, and in favour of DSD. How does this manifest itself?
Basically, the recorded sound is richer and more detailed. It represents the analogue sound of the original sound source better, the dynamics are better reproduced, the stereo sense of space is better.
But there is a drawback: you need a special Digital/Analog converter that supports the DSD format.