High fidelity or hi-fi reproduction is a quality standard that means the reproduction of sound or images is very faithful to the original. High fidelity aims to achieve minimal or unnoticeable amounts of noise and distortion.
In the 1950s, the term high fidelity began to be used by audio manufacturers as a marketing term to describe records and equipment which were intended to provide faithful sound reproduction. While some consumer simply interpreted high fidelity as fancy and expensive equipment, many found the difference in quality between "hi-fi" and the then standard AM radios and 78 RPM records readily apparent and bought 33 LPs, such as RCA's New Orthophonics and London's ffrrs, and high-fidelity phonographs. Audiophiles paid attention to technical characteristics, and bought individual components, such as separate turntables, radio tuners, preamplifiers, power amplifiers and loudspeakers. Some enthusiasts assembled their own loudspeaker systems. In the 1950s, hi-fi became a generic term, to some extent displacing phonograph and record player. Rather than playing a record on the phonograph, people would play it on the hi-fi.
In the late 1950s and early 1960s, the development of the Westrex single-groove stereophonic record led to the next wave of home-audio improvement, and in common parlance, stereo displaced hi-fi. Records were now played on a stereo. In the world of the audiophile, however, high fidelity continued and continues to refer to the goal of highly-accurate sound reproduction and to the technological resources available for approaching that goal.
What is the big deal about hi-fi and separate components?
As mentioned before, separate components are built with a single purpose in mind. eg The CD player only reads the information on the disc and relays that information as a signal to the amplifier. The power supply and electronics within the CD player don't have to worry about doing any other job. This dedication of purpose means that more of the detail in the music is preserved and replayed. This is, as is also already stated, what high fidelity is. Maintaining and preserving the signal as closely and accurately to the original recording session, allowing the detail to be heard and the music to be enjoyed more.
What do you mean enjoy the music more?
If a song is good, then a song is good, is it not?
True, but listening to that song on AM radio through a transistor radio and listening to that song on a quality music system are two vastly different experiences, wouldn't you agree?
But aren't separate components expensive?
Like anything in life you can pay as little or as much as you want. But ask yourself this: How much have you invested in your music collection? Music is a universal language, a means of expression. Reciprocally, music moves us. That's why you've spent so much time and money buying the music you like. So doesn't it make sense to invest in a system that allows you to hear and enjoy your music to its maximum potential?