This may get moved, but I'll answer here.
Light Pipe is also known as "ADAT Light Pipe" and can carry 8 channels of audio at 44.1 (CD rate) or 48k (DAT, etc.)
The optical cable (also called Toslink) is almost always made of plastic, and is exactly the same type of cable used for consumer-level 2-track "Optical" digital connections, etc. The circuits at the send and receive ends determine how many channels the cable will carry. A few devices (2nd generation CreamWare Scope, for example) can switch between two optical types, but most do not.
A fairly common practice with digital devices is to provide an expansion slot into which such things as ADAT Light Pipe cards may be plugged. To carry 16 channels you will need two ADAT Light Pipe sockets in the sending device and two in the receiving device. And while ADAT Light Pipe does carry digital clock, complex systems with multiple devices may need to connect to a discrete digital clock in order to avoid clicks, pops, and glitches.
The downside of ADAT Light Pipe is that it uses the Toslink connector which may be the second-worst commonly used connector in all of audio. (There's also a mini-toslink but that's a topic for another day. Just be aware that it doesn't work with ADAT Light Pipe. It could, but I don't think any manufacturer is that mean.)
What takes place at the send & receive ends depends entirely on the sending & receiving devices. ADAT Light Pipe only deals in digital signal. To get an analog signal into ADAT Light Pipe requires Analog to Digital (A/D) conversion at the sending end. The receiving end is responsible for any Digital to Analog (D/A) conversion.
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