MPEG layer 3 is a type of audio codec where processed by significant compression from the original audio source, very little loss in sound quality occurs. The compression, up to 12:1, produces very little degradation. Tighter compression can be achieved, but the possibility of audio quality degradation increases.
To obtain certain compression, we must adjust the bit rates. The standard bit rates (near CD quality results) is 128 or 112 kbit/s. Many people claim that low-rate MPEG layer 3 files sound better than Real Audio files with similar bit rates.
The advantage of MP3 is that it can be broken up into pieces, and each piece is still playable. The feature that makes this possible (headerless file format) also means that MP3 files can be made to stream across the net real-time (assuming the playback bitrate and speed of the Internet connection are compatible).
The disadvantage of MP3 compression is that lots of processor power is required to encode and play files, also a sound-card is required (16-bit sound card).