In any part of a system (amplifier, equalizer, cable, etc.), there is an ideal, expected output signal waveform. Any false reproduction of audio is considered signal distortion.
The most common example of distortion occurs in analog equipment when the capabilities of the gear that receives or delivers the signal are exceeded. The amplitude of a signal must fall in a certain range to be accurately received by the device. The better quality the device, the more accurately it will handle the signal (less distortion).
The original signal is beyond the threshold, so the resulting signal is squared off.
If the amplitude of the signal is too low or too high for the device, it may be less intelligible because of signal distortion. The distorted sound is actually the odd harmonics of the signal being amplified and then added back into the signal.
Manufacturers generally specify their product to be within a certain allowable tolerance of total harmonic distortion (THD). THD is generally given as a small percentage of the total signal, and measured at the maximum specified output of the device.
Telephone conversations, not known for their audio quality, generally tolerate up to 10% distortion. In professional AV systems, a 1% THD is noticeable to most.
It is up to the AV systems professional to assure that the installed system adheres to this tolerance by assuring the system is designed, set up and adjusted so that each item of equipment is getting and delivering the signal levels within the limits stated by the manufacturers.
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