MP3 Basic Info
MP3 is a compression format for storing sounds in digital form.

Music on a normal audio CD is stored in a 'long' WAV format. Disadvantage is a very big size - average CD (50 min.) has about 500 MB. MP3 algorithm reduces this size 8-10 times. Some sound information from the original WAV is lost and cant be recovered again. But algorithm does it as gentle as possible and uses special methods for deceiving human ears. For example - if you hear two similar frequencies, lets say 11kHz and 11.5kHz, and the first one is louder, the second one you are not able to hear. So MP3 algorithm simply cancels it. And result is a much smaller file. In another words: the whole CD in MP3 has the same size as one song in WAV and quality is almost equal.

But be careful! Here are 2 problems:

1) there are a lot of programs for creation MP3 from WAV ('codecs') but every one is programmed in a different way and produces MP3 in a very different quality. Some codecs produce a real shit that cant be listened to. So be very careful which codec you use.
I can recommend two of them:
Lame (freeware) and Fraunhofer (relatively expensive, from institute that created MP3 format). Those ones are really top on the market.

2) MP3 algorithm can be used for encoding all kinds of sounds (phone dialogs, speech, music...) and you can choose from a lot of quality levels. Quality level is expressed in a BITRATE.

Note: This value tells how many data is used for one second of music. Eg. bitrate 192kbps (kilo bit per second) means that one second of music is encoded into 24000 bytes (192000/8). The higher bitrate you use the bigger amount of bytes you have for encoding. And quality is better.

For music encoding are acceptable bitrate values from 128kbps. But dont believe that this value is 'near CD quality'. Maybe for my granny who is deaf. I can recommend 192kbps. It brings you a good quality and a still relatively small files. You can also use 320kbps (the highest value for MP3) but be aware that file sizes will grow a lot.

MP3 files can also contain 'TAG' - data space where you can put information about song - its name, artist, album...

Creation of MP3 has 2 steps:

1) copying WAV data from CD to hard disc (grabbing, ripping)
2) encoding WAV into MP3

Many programs are able to do both steps (eg. CDnGO). Almost all of them have a reliable grabber and are able to provide some tools for filling TAGs. But once again - be careful which codec these programs use.

For playing MP3 you can use either computer or any player that knows MP3.
Regarding computer - no special hardware requirements are needed. I used successfully Pentium 75Mhz, 8 MB RAM. But sound card is necessary. And then software for playing. There are many of them on the net but I can recommend WinAmp.