The short explanation
Optical and coaxial links were built for two-channel PCM. IEC 61937 wraps a compressed bitstream — Dolby Digital, DTS — so it looks like PCM in transit. The receiver recognizes the wrapper, unpacks it and decodes properly.
HDMI inherited the same framing, which is why it appears on HDMI specification sheets.
Where you run into it
It explains one classic failure. If a device treats a wrapped bitstream as if it really were PCM, it plays it as audio: loud white noise. Anyone who has heard that once remembers it.
In practice the standard is why bitstream passthrough works at all, and why the receiver — not the source — ends up doing the decoding.
How the DR HDMI 8K handles it
The DR HDMI 8K lists compressed audio (IEC61937) among its supported formats alongside PCM, DSD, DST, DTS, DTS-HD, TrueHD, DTS-MA and HBR. It passes audio through without compressing or down-converting anything, so what the source sends is what the receiver gets.
Want to test your own HDMI chain?
The DR HDMI 8K is sold through the HDFury.eu web shop.