In audio it is the highest frequency that may be accurately sampled based upon the sampling rate. It is based on the Nyquist Theory, which applies to many different fields where data is captured. In general terms the Nyquist Theory is the minimum number of resolution elements required to properly describe or sample a signal. In order to reconstruct (interpolate) a signal from a sequence of samples, sufficient samples must be recorded to capture the peaks and trough of the original waveform. In digital audio the Nyquist Frequency is half of the sampling rate. For example, when a digital recording uses a sampling rate of 44.1kHz, the Nyquist frequency is 22.050kHz. If a signal being sampled contains frequency components that are above the Nyquist limit, aliasing will be introduced in the digital representation of the signal unless those frequencies are filtered out prior to digital encoding. For those who want the gory details there is an excellent paper called Consequences of Nyquist Theorem for Acoustic Signals Stored in Digital Format available at the Digital Recordings website.
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