The noise floor of a system is the level at which the background noise occurs. In analogue systems, this will be the hiss and/or hum. In digital systems, this will be the point at which audio has less than one bit to represent it (audio at this level sounds like a crunchy mess).
The saturation point of a system is the level at which audio becomes noticeably clipped or distorted. In analogue systems, this is the point at which the system is overloaded and starts to behave non-linearly (often it’s when the signal is distorted by 1%). In digital systems, it’s ‘Full Scale’ – any louder and the audio is mercilessly clipped.
This is the measurement reference point. It’s the level that we call 0dB (or sometimes, unity). In digital systems, this is always at the same level as the saturation point. In analogue systems, the nominal level is some distance below the saturation point: 18dB or 24dB for example.
The levels of the noise floor and saturation point are measured relative to the nominal level. For example, an analogue system might have its saturation point 18dB above the nominal level and its noise floor 72dB below ths nominal level. We say the saturation point is at ‘+18dB’ and the noise floor is at ‘-72dB’. A 16 bit digital system has its noise floor 96dB below the saturation point, and because it’s a digital system, the saturation point is also the nominal level: 0dBfs. Because the noise floor is 96dB below the nominal level, we say the noise floor is at ‘-96dB’. The level difference between the noise floor and the nominal level is also called the signal-to-noise ratio.
The dynamic range of a system is the difference between the noise floor at the saturation point. In the above analogue example, the noise floor is at -72dB and the saturation point is at +18dB. Thus the dynamic range is 90dB. In the above digital example, the noise floor is at -96dB and the saturation point is at 0dB. Thus the dynamic range is 96dB.
The dynamic range of a piece of audio is the difference between the quietest level and the loudest level. If the dynamic range of the audio is greater than the dynamic range of the system, it should be compressed. This will reduce the dynamic range of the audio so that it can be adequately processed by the system.
The headroom of a system is the level difference between the nominal level and the saturation point. In the above analogue system, the saturation point is at +18dB, thus it has a headroom of 18dB. In the above digital system, the saturation point is at 0dB, thus is has no headroom – in the traditional sense.
The headroom required by a piece of audio is the difference between the steady-state average level and the maximum peak level. In an analogue system the gain is often set so that the average level is at 0dB. In these cases, the headroom of the system should be greater than the headroom required by the audio – otherwise audible clipping will occur.
The situation is different with digital systems. Because digital systems have no headroom above 0dB, it is common practice to set audio gain as if the nominal level is actually much lower. Unfortunately, there is no standard practice or agreement for what the in-practice nominal should be. Bob Katz’ K-System attempts to, among other things, set three standard nominal levels: -20dB, -14dB and -12dB. Each has a different trade-off- between available headroom and overall volume.