This PDF file covers all important recent aspects of the MPEG-4 standard (not only audio) on 30 pages and so can serve as an up-to-date overview for those who wonder what this is all about:
http://www.m4if.org/public/documents/vault...4-out-20027.pdf
Here's an excerpt shortly describing the audio part (page 16):
Extensions to MPEG-4 Advanced Audio Coding
MPEG-4 Advanced Audio Coding (AAC) is the most powerful audio codec licensed today. The near CD quality MPEG-1 Layer 2 audio codec (used in many digital video broadcasting apps) delivers high-quality stereo at 128kbit/s/channel while MPEG-4 AAC (Advanced Audio Coding) offers the same quality at 64kb/s/channel. MPEG-4 audio is capable of coding 5.1-channel surround sound very effectively and even allows transmission of wavefield audio data that will extend the listening sweet spot to the whole room in future sound systems.
The original MPEG-4 AAC has recently been extended with a technique called Spectral Bandwidth Replication, which gives spectacular bandwidth savings for apps like Internet Audio and digital broadcast. MPEG-4 AAC with SBR can deliver high quality stereo audio at a mere 48kbit/s. The SBR extension is both forward and backward compatible: an existing MPEG-4 AAC decoder can decode the extended signal (without the enhancement) and a decoder with SBR understand a signal that makes no use of the technique.
For digital audio broadcasting, MPEG-4 AAC is becoming the codec of choice. The satellite-based XM Radio uses AAC-SBR and Digital Radio Mondiale (DRM), that starts broadcasting in 2003, also uses AAC.
MPEG-4 Audio is inherently scalable. If, for example, a transmission uses an error-prone channel with limited bandwidth, an audio stream consisting of a small base layer and a larger extension layer provides a robust solution. Strong error protection on the base layer (adding only little overhead to the overall bitrate) makes sure there is always a signal, even with difficult reception. The extension layer (with little error protection) and base layer together give excellent quality in normal conditions. Any errors lead only to a subtle degradation of quality but never in a total interruption of the audio stream.