it's plugged into any device that accepts digital signals through SPDIF...devices such as DAT players, sampling machines etc...uses SPDIF for better flexiblity.
Sony Phillips Digital InterFace.
It's a stereo digital signal that you use a 75 ohm video type coaxial cable terminated in RCA connectors to patch to another device that has a digital input. Then we get into master clock questions and answers.
SPDIF is a digital protocol...it's the consumer version of AES/EBU. It typically carries two channels of audio.
The cable required for it is a 75ohm coax or fiber cable usually with RCA connections on them. But you'll also see it sometime with BNC or Toslink.
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or what Track rat said, he beat me to the punch