I have a Archos Jukebox recorder that I recently put Roxkbox on. I love the rockbox interface and its 100 times better than that crappy Archos one that was on there. I have recorded several things by simply hooking up my audio output to the Archos audio input. It has worked well.
However, I see that there is a digital in/out that seems to accept the same 3.5mm jack. I see how I can change my source recording in Rockbox to reflect this port, but what exactly is this used for?