Virtual Audio Cable is a Windows WDM multimedia driver allowing you to transfer audio (wave) streams from one application to another. It creates a set of "Virtual Cables" each of them consists of a pair of the waveform input/output devices. Any application can send audio stream to an output side of a cable, and any other application can receive this stream from an input side. All transfers are made digitally, providing NO sound quality loss. VAC is a "wave-version" of the "MIDI loopback cable" like MultiMid or Hubi's Loopback drivers.
If more than one applications are sending audio to VAC, it will mix all streams together. If more than one applications are receiving audio from VAC, it will share the same audio data between all targets.
VAC is useful to record application's audio output in real time (for example - Generator, Reality or other software synth), or transfer a sound stream to another application processing it. You can, for example, use two or more software audio generators/synthesizers/sequencers to produce audio streams sending them to VAC Out, and record the mixed stream from VAC In using any recording software - Windows Sound Recorder, Sound Forge, WaveLab, Cool Edit, Gold Wave, Cakewalk, Cubase etc.
With an ASIO wrapper like ASIO4ALL from Michael Tippach, you can use VAC in ASIO supporting applications.
If you use an audio encoder application that encodes a stream coming from a sound card, you can use VAC to supply such encoder with a stream produced by other application.
You can use VAC to "thief" an output sound stream from the application that doesn't allow to write it into WAV file directly. Unlike Total Recorder allowing you to simply save audio stream, VAC allows to route it in real time.