Using error correction when extracting information from a CD is just an extra level of validation that you're getting a bit-accurate copy of the media. It takes longer, but worth it when you're looking for the best possible reproduction. You can think of it as a second scan of every ring, and you're right in thinking it has nothing to do with playback.
Apple Lossless Compression is bit-accurate and just involves a storage compression routine. Compression has gotten a bad rap from the audiophile community (sometimes for good reason) because of the inherent loss in mp3 and other compression schemes. When ALC tracks are played back, you get the same 16-bit 44.1 KHz signal that would be coming from a cd or wav/aiff file. Just like using winzip or stuffit to compress a Word document then uncompressing it later.
Apple Lossless Compression is bit-accurate and just involves a storage compression routine. Compression has gotten a bad rap from the audiophile community (sometimes for good reason) because of the inherent loss in mp3 and other compression schemes. When ALC tracks are played back, you get the same 16-bit 44.1 KHz signal that would be coming from a cd or wav/aiff file. Just like using winzip or stuffit to compress a Word document then uncompressing it later.