ITunes convert to ALAC - is it actual lossless?

So I was rearranging some stuff in iTunes yesterday when I right clicked on some songs I had purchased from the iTunes store and noticed that there was an option to convert to Apple Lossless. 
Previously, I had to rerip all my CDs when I made the switch to lossless, and was dissapointed when I saw that all the songs I got from iTunes were 256 kbps, so I was kind of surprised when I saw that option. 
Anyways, I got all my iTunes store purchases converted to ALAC (296 songs now takes up 8.5 GB on my iPod O_O ), but I was wondering, either how this conversion is made (wouldn't all the extra data lossless has be lost in the compression?) or is this an actual lossless conversion, or something similar to upscaling vs native resolution (upscale is an attempt at getting the quality of native resolution).
For anybody that knows >_>
Thanks guys.

Yes, they are lossless but what you have now is 256k quality in lossless format  -- your upscaling.  It is not the same as if you had ripped from full quality CD to lossless.  If you convert those losslesss files back to AAC there will be dditional quality loss as there is whenever you convert any audio format to a lossy format.  iTunes lets you convert from any format to any other format but that doesn't always mean it makes sense to do so.

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