MP3 is an audio coding format which uses a form of lossy data compression. The highest bitrate of this format is 320kbps (kbit/s). MP3 Digital audio takes less amount of space (up to 90% reduction in size) and the quality is not as good as the original one.
FLAC is an audio coding format which uses lossless compression. Digital audio in FLAC format has a smaller size and retains the same quality of the original Compact Disc (CD).