The direct pass on your receiver supposedly passes the audio signal with no digital processing or conversion, straight to your volume control and then to your amps. If done properly it can give the cleanest sound quality, depending on the source, because it avoids additional AD/DAC conversion. It works best in two channel from a good CD player because in multichannel you usually lose the bass unless you use full range speakers without a sub. Multichannel direct pass takes the 5.1 analog signal from a SACD or DVD-A player and sends it straight to the volume control/amps with no digital processing. So it forces you to rely on the SACD/DVD-A player for any adjustments for bass, speaker distance/size, etc. If you are not an afficianado of audiophile two channel music or do not have a SACD/DVD-A player with bass management, you are probably going to prefer the standard DD/DTS/DPL or other digital processing into your surround speakers/sub.
As for the cable box I guess it means the signal passes directly through the cable box and so bypasses the cable tuner/settings and goes straight to your TV tuner. But that is just a guess.
Dsmith