Apple - What is the quality of the music sold in the iTunes store?

From this article:

Music encoded as 256kbps AAC files first came to the iTunes Store in 2007 with the launch of Apple's iTunes Plus. That marked the debut of DRM-free music tracks encoded at a higher quality bitrate that Apple claims is virtually indistinguishable from the original recordings.

As of 2007 the audio files sold in the iTunes store have been encoded using the Advanced Audio Coding (AAC) codec and distributed with .m4a extensions from the iTunes store. The 256 kbps setting is an average bit rate encoding scheme, not a fixed bit rate encoding scheme. The actual sample rate is varied dynamically based on the content and time.

Is this quality comparable to that of a lossless file or CD?

This is somewhat subjective. The encoding is a lossy encoding so from a purely bit-wise perspective the content sold in the iTunes store is not 100% identical to content from a CD -- when expanded back to a .wav format to match the bits on a CD, the expanded bits from the AAC file would not match perfectly with the bits on the CD because of of the lossy encoding. However, it is said, bitrate of the encoding used on iTunes files imparts no human-perceptible loss in the audio when compared to the source CD material. This sort of stuff is harder to verify, requiring double blind tests and the opinions of hopelessly fallible human beings.

I wouldn't say night and day. The difference may be between afternoon and dinner time. I think that I have a pretty good audio system. I use Revel Ultima Salon 2 speakers backed up by an Ayre V-5xe amp, Ayre preamp, Acoustic Research DAC8 and an Aurender N100H as a source. Other sources are a recently significantly upgraded CJ Walker turntable and an Oppo BDP 95 disc player. When I play the same piece if music at 256 and in lossless, I often find that there is a slight but palpable loss of what I think of as a sort of sheen to the music. That sheen is not filled with 'hitherto unheard notes'. It is however filled with micro nuances to existing notes. It's the realism to cymbals and drums. However, on many recordings, I'm very hard pressed to hear any difference all. If the stuff wasn't there in the first place, it's hard to hear it on playback no matter the file (at 256 and above).

The Apple product is very good. If I want to listen to something critically, I'll hunt down a hi res flac or alac file, use a good quality cd or SACD or I'll use my turntable. On the other hand, for good quality, relatively inexpensive, every day listening, Apple's product is very good. I think that despite the numbers (256), Apple does some magical things within the ACC encoding.

I concur with the view that 256 is an average. Indeed, I think that it's floor. As I said above, I use an Aurender N100H digital streamer. The Aurender app on my iPad reveals the bitrate of all songs that are playing. Frankly, a very large number of Apple's ACC files report bitrates in the high 300s.