dvd settings for audio

My answers below assume you really have a DVD player and not a Blu-ray player. Blu-rays have more complicated answers.
receiver: Bitstream. TV: bitstream if your TV can decode DTS. Most can. Bitstream passes through the multichannel audio exactly as it is coming from the disc. The player needs to convert the audio to PCM if the audio playback device can't decode the audio coming from the disc. (Many TVs can't decode DTS.) This needs to be on only if you want to watch something which could have loud explosions late at night and not disturb other people. It limits the maximum volume. Usually, this feature is included in the TV or receiver, though, which can do a better job. Receiver: probably off. TV: probably on.
It downconverts high resolution 96KHz or 192KHz sampling to the standard 48 (or 44.1) KHz. Some audio output devices can't handle the higher bitrates, but very few DVDs have high bitrate audio, anyhow.


I hope this helps a little.

Very few TVs can decode DTS. If connected to a receiver, use bitstream. Otherwise, use PCM.

If you are using HDMI to connect a player to a TV, those settings don't matter because the handshake between the player and the set will negotiate the correct settings. If the TV cannot handle DTS, for example, the HDMI handshake will override the bitstream setting so that the player does the decoding and sends a properly downmixed stereo PCM signal.

Also, dynamic range and PCM down sampling only come into play when the output is PCM. If you are set to bitstream, those adjustments would have to be handled by a receiver doing the decoding.
Edited by BIslander - 12/1/12 at 3:32am

^^
Component cables are for video. Presumably, you are using stereo analog cables for audio. With analog stereo, the digital setting has no effect. The player will decode the track, downmix it to stereo, and convert it to analog.