MP3, What's it all about?

Hello folks, Ars Technica has just posted a fascinating article about the most popular audio compression standard: MP3. MP3 stands for "MPEG-1 Audio Layer 3."
But what is MP3?

This guide attempts to explain the process of MP3 compression in simple terms, without oversimplifying it. Although some parts have been omitted, like the details of stereo encoding schemes and in-depth file composition, it covers the basic theory of turning uncompressed sound files into compressed MP3.
In order to tour the MP3 codec without getting overwhelmed by the technical minutiae, we'll take a look at some of the background principles and legacy of MP3, then break the process down into analysis and compression before finally considering the impact that this humble format has had on digital audio.
Read on.