Pcm Or Bitstream. Bitstream (DTS) = compressed surround sound. basically you want Linear PCM, Dolby/DTS exist for compatibility reasons with certain audio hardware that can't handle the Uncompressed audio. The game setting of Bitstream or PCM is independent of blu rays.
PCM (Pulse Code Modulation) and bitstream are two industry standards of sending audio from the player or Bitstream and PCM are capable of producing the same audio quality, and the only.
Raw stream may contains PCM or DSD audio data, that compressed or not.
As rule, bitstream is recommended for SPDIF interface. PCM (Pulse Code Modulation) and bitstream are two popular and important audio standards for transmitting audio signals. This PCM/Bitstream option doesn't effect the players analogue outputs.