I found out about FLAC a few days ago by pure chance.
What is FLAC?
FLAC is an acronym for "Free Lossless Audio Codec" which is a format for Audio files.
Why it rocks??
FLAC differs from other audio codec's in that it is lossless, so sound quality is great and nothing is lost. It is the same as if you are listening to the original audio source. Note that mp3 is lossy, some data is lost in the compression operation. I used to listen to mp3's in my car's cassette using my Nokia N70, FLAC files are a huge difference in sound quality.
By the way, Nokia Music Player does not play FLAC files, but oggplay does. It is a good music player that is faster to load, has more options, very customizable and is open source.
Huge file size, a single album which might take 70-100MB takes about 300-500MB, but sound quality deserves such increase.
Check those links to know more about it:
In short, FLAC is when you realize that mp3 is a serious degradation in sound quality :)