What flap on 360 vga cable does?

Doesn't have to be surround sound - I use it for stereo. :)

It's basically for sound and the signal gets sent as light pulses down a plastic/glass cored cable.
 
The optical connector, is a standard way of sending un-decoded digital sound to some sort of audio reciever, such as a surround sound amp. Generally, (and optimally), it's going to be 5.1 Dolby Digital or DTS sent via the cable, though 360 games don't do DTS. As wush said also, it can be used for 2 channel stereo as well.
 
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