Transcoding
From SqueezeboxWiki
The Squeezebox and Transporter family are capable of playing a number of music formats using codecs (see BeginnersGuideToFileFormats) in their firmware (see PlayerFirmware). Other formats are also playable using the transcoding feature of SqueezeCenter.
In general this feature uses a PC-based decoder to uncompress the data to PCM (wav or aiff) and then (again on the PC) re-encodes the data into a format the Squeezebox can understand (often FLAC).
Due to the processing on the PC, files played in this manner can't be controlled with fast forward and fast rewind. Track advance and track rewind work normally, though.
The behavior of this feature is governed by the 'File Types' page in the 'Server Settings' for SqueezeCenter, which writes in turn to a file called 'convert.conf'.
Some interesting hacks are possible if you are interested in undertaking them. Some examples:
