What is the difference between mp3 music files and pcm music files?

PCM (Pulse Code Modulation) is a means of storing analog audio in a digital form. This is achieved by sampling the sound wave and then the individual samples are stored sequentially in binary format. This can result in large files.

MP3 (MPEG-1 Audio Layer 3) is a standard means of compressing audio which has become popular on computers and via the internet resulting in the creation of MP3 players such as the iPod. It provides for a variable level of compression resulting in small file size but maintaining an acceptable level of audio fidelity.