Originally Posted by gents
I would have never looked under bitstream. I don't even know what bitstream is, so...
Literally, it's a stream of bits (0's and 1's). It's encoded (compressed). Therefore it needs to be decoded before your receiver can convert it to analog, amplify it, and send it out to your speakers. You can have your blu-ray player decode it before sending it to the receiver, in which case your receiver reports "Multi Ch In".
Alternatively, you can have your receiver decode it (that's what happens when you set your blu-ray player to "bitsream"). The only advantage to setting it up this way is that the receiver tells you which bitstream it's receiving (dts, Dolby 5.1, dts-HD, Dolby TrueHD, etc) so you know what you're getting.
My blu-ray player, for example, won't decode or bitstream dts-HD Master Audio, so all I get is regular old dts.