FLAC is an audio format for lossless compression of audio. FLAC stands for Free Lossless Audio Codec. Files with FLAC file extension offer highest audio quality of any audio formats. The format is maintained and developed by Xiph.org and as the name suggest, is a free, open source technology.
FLAC isn't a popular audio format. MP3 format dominates the audio market, although it offers significantly worse sound quality. One might argue that MP3 audio offers just good enough quality for average user, yet even a complete novice or untrained listener will notice a difference in audio quality between those formats.