Why is Dolby Digital required for encoding optical media?
Once a 5.1 mix has been encoded into the Dolby Digital format, it is no longer audio- rather, it's a data stream. This is used as a means of wrapping 6 discrete channels of audio (5.1 mix) into a 2-channel stream that is supported on 2-channel-only delivery medium (e.g. a DVD).
The DVD spec does not support 5.1 PCM audio. This is why distribution codecs, such as Dolby Digital, were created.
Dolby Digital takes 5.1 PCM audio and encodes it into a 2-channel AC-3 stream. This *.ac3 file can then be authored to a DVD title. Once the DVD has been authored, it can be played back in a DVD player that has a Dolby Digital Decoder. 99.9% of DVD players support Dolby Digital - you will see a "Dolby® Digital" badge on the front of the player. The Dolby Digital stream will be decoded by the player, and each of the original, discrete channels will play back on the corresponding channel of a home theater or similar playback system.