Why does using AIFF Encoder use more space than original CD?

I import with the AIFF Encoder option, as I want the best possible sound quality. A Full CD uses 700 MB, yet when I import a full CD into itunes, it says that is is using more than 800 MB. How is this possible?

Using the AIFF/Apple Lossless encoder is different to using CDA or MP3 format.
This is like a comparison between digital and analogue.
Digital is about space efficiency - so, look at a CD - It's small right?
This is because they have only taken sounds within a narrower band-width than the band-width used on a record (vinyl) and they have also encoded it (it's like shortening 'male' to 'm' under sex)
Vinyl has a huge band-width (just compare a full-sized record to a CD) and takes every little detail of a song, every rich sound and keeps it as a value on its' surface.
This is the same as the AIFF of Apple Lossless format - they take every little sound and put it inside the file - which makes it high quality but huge!
I have compared sizes and AIFF of the same file is 10 times the size of the AAC.
The digital formats use maths equations rather than on/off values for sounds.
I would not use this format (AIFF or Apple Lossless) unless you were transferring from vinyl to your iPod and you didn't want much else because it is full of on/off values.
CD's have reduced quality of sound and downloads are limited to the speed of the servers for quality BUT if you still want good quality and small size, encode in AAC - It is better than an MP3 because AAC is 4 layers of maths instead of 3 layers in an MP3.
Remember though, there is no point in making a high quality file from a lower quality source - you are just filling your iPod with no noise!

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