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What is the difference between .MP3, .AIFF, .WAV, and .CAF files?

The short answer is NOT A LOT!
They are all music files which GarageBand will understand.

The long answer details their differences in quality and functionality:

.Mp3 - MPEG-1 or MPEG-2 Audio Layer III, more commonly referred to as "MP3", is a patented encoding format for digital audio which uses a form of lossy data compression. It is a common audio format for consumer audio storage, as well as a de facto standard of digital audio compression for the transfer and playback of music on digital audio players. The use in MP3 of a lossy compression algorithm is designed to greatly reduce the amount of data required to represent the audio recording and still sound like a faithful reproduction of the original uncompressed audio for most listeners. An MP3 file that is created using the setting of 128 kbit/s will result in a file that is about 1/11 the size of the CD file created from the original audio source. An MP3 file can also be constructed at higher or lower bit rates, with higher or lower resulting quality.

.Aiff - Audio Interchange File Format (AIFF) is is an audio file format standard used for storing sound data for personal computers and other electronic audio devices. The format was co-developed by Apple Computer in 1988 based on Electronic Arts' Interchange File Format (IFF, widely used on Amiga systems) and is most commonly used on Apple Macintosh computer systems. The audio data in a standard AIFF file is uncompressed pulse-code modulation (PCM). There is also a compressed variant of AIFF known as AIFF-C or AIFC, with various defined compression codecs. Standard AIFF is a leading format (along with SDII and WAV) used by professional-level audio and video applications, and unlike the better-known lossy MP3 format, it is non-compressed (which aids rapid streaming of multiple audio files from disk to the application), and lossless. Like any non-compressed, lossless format, it uses much more disk space than MP3—about 10MB for one minute of stereo audio at a sample rate of 44.1 kHz and a sample size of 16 bits. In addition to audio data, AIFF can include loop point data and the musical note of a sample, for use by hardware samplers and musical applications.

.Wav - Waveform Audio File Format (WAVE, or more commonly known as WAV due to its filename extension), (also, but rarely, named, Audio for Windows) is a Microsoft and IBM audio file format standard for storing an audio bitstream on PCs (although they're also compatible with Apple and Linux Operating Systems). Though a WAV file can hold compressed audio, the most common WAV format contains uncompressed audio in the linear pulse code modulation (LPCM) format. WAV files can also hold metadata.

.Caf - Core Audio Format (CAF) is a container for storing audio, developed by Apple Inc.. It is compatible with Mac OS X 10.4 and higher; Mac OS X 10.3 needs QuickTime 7 to be installed. Core Audio Format is designed to overcome limitations of older digital audio formats, including AIFF and WAV. Just like the QuickTime .mov container, a .caf container can contain many different audio formats, data, or metadata tracks (i.e., the characteristics of the sound file, like "strings", "single", "", etc.). Not limited to a 4 GB file size like older digital audio formats, a single .caf file can theoretically save hundreds of years of recorded audio due to its use of 64-bit file offsets. Soundtrack Pro and Logic Studio use the .caf format extensively for their loop and sound effects library, particularly for surround-sound audio compressed with the Apple Lossless codec.

In GarageBand, which audio formats can I import and export?

In GarageBand, you can import AIFF and WAV files as long as they are 16 bit (most are). If you import an mp3 file, it will be converted and stored in your project as an AIFF file.

In GarageBand, you can export as an AIFF file to iTunes, where you can convert between four audio formats: AAC and MP3 (which are compressed files, not very large) and AIFF and WAV (which are uncompressed, large files). *Note - You can also export straight to your desktop without iTunes, but then you're limited to AAC and MP3.