Dolby Digital Settings is a new feature in Windows 7 Media Player. It is used for enhancing sound effects if you are watching the Dolby digital content in windows media player.
There are three modes available in the Dolby digital settings of Windows 7 media player.

Normal – Reduces the audio range of all Dolby Digital content …

By default, Windows Media Player can only play a limited type of audio and video files (WMA, MP3, WMV, ASF, MPEG etc.). For playing other types of media files (MP4, 3GP, MOV, FLV etc.) in Windows Media Player, you need to either download a separate media player or find suitable codec packages for Windows Media …