Let's say that we have a simple waveform like this:

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When we digitize the waveform, what we are doing is "measuring" the amplitude (vertical position in the drawing) repeatedly many times per second, as indicated by the green lines:

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These measurements give us a series of points, indicated by the green dots. These are called "samples" or "sample values".

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Keep in mind that in the digital format, the red line joining the dots does not actually exist. All that actually exists in the digital representation is a series of numerical values that were recorded, and will play back, at regular intervals indicated by our "sample rate" (the number of samples per second).

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Resampling:
Now let's say that we want to "resample". That is, we want to use a different sample period (as indicated by the blue lines below).
Notice that our green dots no longer match up with the sample positions that we want to use:

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So what we need to do, is to calculate new sample values, from the old sample values, that match up with the new sample rate.
The blue dots represent the new samples:

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So that from the new samples, played at the new sample rate, we can reconstruct the same (or very similar) waveform:

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The exact way that the new samples (blue dots) are calculated from the old samples (green dots) is a complicated mathematical process called "interpolation". There are many different ways to do this calculation. Some methods are quicker to compute than others - some are more accurate.
Audacity provides 4 methods of computing the new sample values. These are described in terms of "speed to compute" and "accuracy / quality" in Preferences:
- Low Quality (Fastest)
- Medium Quality
- High Quality
- Best Quality (Slowest)
(see here in the manual for details:
http://manual.audacityteam.org/o/man/qu ... ences.html)
The conversion is performed using a software library called "soxr". More information about this library can be found on their web site:
http://sourceforge.net/p/soxr/wiki/Home/