FLAC is as good as an exact copy of the original. No data is lost. You should be able to decompress a FLAC to get the
exact original WAV file (and I think I did that once to test it out).
For more info, see
http://en.wikipedia.org/wiki/Free_Lossless_Audio_Codec and
http://flac.sourceforge.net.
One big benefit of FLAC is that you have the ability to take all of your FLAC files and batch reencode them to another format later on, with NO loss in quality. Trying that with music already encoded in a lossy format like MP3 will definitely cause noticeable degradation. So I never have to worry about ever taking out my old CDs and recompressing them in the future, no matter what format I may want them in.
A basic example of lossless compression: You have a file of 100 "x" characters. That would normally take 100 bytes. A simple compression program could reduce that to 4 bytes by changing it "100x". Of course that's an absurd example, but it shows the idea of how lossless compression makes files smaller without losing the ability to recover all the original data, as a FLAC player will do in realtime.
Linear Mode
