[popcornmix]

ActiveAE has three build-in profiles: Best Match, Optimized and Fixed.
Fixed takes care that all audio you will play is play in the very same data format. Your receiver does not need to switch modes.
Best Match is what previously existed as the "audiophile" mode. Whenever a new video or music playback starts, the audio engine will select the best sink for that stream.
Optimized is something special, as it tries to reduce the reopening of sinks a lot. One example is live-TV where it switches between 5.1 to 2.0 during commercials. In order to not open the device anew and loosing some (milliseconds of) audio, the 2.0 commercials are played with the already open 5.1 sink by muting the non existent channels."

Does it apply to "normal" PCM output streams? Or only in pulseaudio..

This applies to any non-passthrough audio, either Pi Sink or ALSA Sink (but not omxplayer).
Best match plays audio at it's native sample rate, and results in the highest quality and lowest CPU.
Optimized will sometimes resample. Fixed will often resample.

Optimized and fixed will avoid gaps when switching between tracks with different sample rates.