These adapters take the "normal" optical audio cables (the ones that shine a red light through when connected) and gives an connector to fit a hybrid digital/optical socket - as is found on the Mac Mini, Macbook, Airport Express, etc. (sorry PC folks, but I'm sure you get the idea; check the technical specifications of your device if you're unsure)
Once connected, the Mac detects that you're using a digital connection - and the sound preferences output (or input, if that's what you're using it for) changes from "Internal Speakers" to "Digital Out".
My Mac mini is now happily hooked up to a decent amplifier, and I have an Airport Express connected to another amplifier in a different room that streams music from iTunes. How much difference is noticeable between a standard analogue left/right connection and this for my current usage is debatable - but it proves it works, and gives added future proofing if I wish to have surround sound for DVDs via the computer, or something.
A bargain for the price, and delivered extremely quickly (via a Marketplace seller). Make sure you know what you're buying, and you'll be fine - and remember, don't mark down a product because you've bought the wrong thing!