As with television, digital radio simply means that the signals are broadcast digitally, as a stream of data, as opposed to the analog radio waves used with standard radio since the medium was invented. HD (Hybrid Digital) radio has become the industry term for digital radio broadcast terrestrially. That's partly due to the superior quality of the signal when compared to analog, and partly because of the greater amount of data that can be relayed within the same bandwidth, providing additional options to the listeners. The initials HD also link the product in the public's minds to the popular high definition television.
With the right equipment, digital and HD radio provide a much higher audio quality than analog, delivering a clearer signal free of static and other distortions, and boosting AM radio to FM quality and FM stations to CD-quality sound. The digital radio receivers are designed to sort through the "multipath distortions" that occur when the signal bounces off objects in its path, which is the cause of the static and other sounds that interfere with the audio.
As digital and HD radio signals can relay a greater amount of data, that allows stations to broadcast multiple channels within the main signal, which is known as multicasting. With this, the digital and analog signals are broadcast simultaneously. That allows those with analog receivers to still pick up the station and allows for separate distinct subchannels to also be broadcast along with the main channel, providing additional options for those with digital receivers.
The one major difference between the terms HD radio and digital radio is that digital radio can be broadcast either by earthbound radio stations or by satellite, while HD radio is the term used with terrestrial digital broadcasts only. And while both provide similar sound quality, HD radio has advantages over satellite in that it is free to listeners, with no subscription required, and is locally broadcast, with all the features of a local radio station.
Another advantage of HD radio over satellite and analog radio is that additional text data can be broadcast straight to the radio receiver within the channel, including local weather and traffic information, as well as title and artist information for the currently playing selection, for radios equipped to display this information.