The term "0dBFS" is used to describe the absolute peak level of a digital audio signal and is an abbreviation for "zero decibels full scale."
In digital audio; the possible range of recorded audio extends from digital silence where all bits representing audio signal voltage levels equal zero, to full scale where all bits representing audio signal voltage levels equal one. Digital silence, as the name implies, is the total absence of any audio signal. Full scale is the loudest level an audio signal can reach before some of the original information is lost due to clipping. The effect is very similar to the effect of bipolar analog circuitry clipping the top and bottom off of the audio waveform.
Because PCM digital audio encoding is linear, the most important reference level when recording is the loudest level. In the vast majority of cases, the digital level is displayed with "0db" representing full scale and all other levels represented as a "minus" value in decibels below that level. For more information on digital audio reference levels, please see dB.
PCM digital audio is typically encoded using the Two's Complement system. There are a number of advantages to this approach, which is beyond the scope of this discussion. This system uses all but one of the bits in a digital audio word to represent the voltage level of the encoded audio of either the positive or negative portion of the signal waveform. The other bit represents the “sign” which determines if the voltage was positive or negative at the point in time the audio was sampled.