What is Linear PCM? ...and What is Bitstream??
In laymans terms...think of it this way:
Linear PCM is used when the audio is decoded inside the Player first, and then sent to the Receiver.
Bitstream, is used when the Player does not touch the audio...instead it is left in its raw form and sent to the Receiver, where it is then decoded by the Receiver.
To make a long story short, its just two ways to transfer audio from the Player to Receiver...just a different route taken and theoretically the same in the end.
With that being said let me start off with Multichannel Analog, as its pretty easy concept to understand.
To hear Lossless audio through Multichannel Analog, you need a Player that has Internal decoding capability and Multichannel Analog outputs. (every Bluray player I can think of has these outputs except for the PS3) paired with any Receiver that has multichannel analog inputs.
Each channel is transferred through a single standard RCA cable. So for a 5.1 setup, you would need 6 single RCA cables.(for 7.1 setup you would need 8).
Also, If it cannot be decoded by the player, then you will not hear that specific codec. For example, the Sony BD-S1 can internally decode Dolby TrueHD. But it cannot decode Dts-HD Master. So with the multichannel analog connection, you could hear TrueHD but not Dts-HD Master (only the "core").
Using an HDMI connection is more simple in that it only requires one single cable. But there are some speedbumps (if you will) to its use.
First, you can transfer Lossless audio over an HDMI cable in either Linear PCM or Bitstream format.
In order to utilize Linear PCM through HDMI...you must have an HDMI v1.1 (or higher) Receiver that accepts HDMI audio. Also your Player must be able to decode the formats Internally. Everything that can, will be decoded inside the Player first and sent to the Receiver. It will also be displayed as "PCM" or "Multichannel" on the Receiver.
Bitstream through HDMI is a little trickier as it requires that you have all hdmi v1.3 connections. The Player must be HDMI v1.3 compliant and posses the ability to Bitstream the Lossless audio signal (not all players do) and you must have a Receiver that is HDMI v1.3 compliant that can decode the audio formats as well. This will be displayed on the Receiver with its natural format name...ex. "Dolby TrueHD"
This list is old but you get the point.