Taken from Vorbis.com
What does the “Quality” setting mean?
Vorbis’ audio quality is not best measured in kilobits per second, but on a scale from -1 to 10 called “quality”. This change in terminology was brought about by a tuning of the variable-bitrate algorithm that produces better sound quality for a given average bitrate, but which does not adhere as strictly to that average as a target.
This new scale of measurement is not tied to a quantifiable characteristic of the stream, like bitrate, so it’s a fairly subjective metric, but provides a more stable basis of comparison to other codecs and is relatively future-proof. As Segher Boessenkool explained, “if you upgrade to a new vorbis encoder, and you keep the same quality setting, you will get smaller files which sound the same. If you keep the same nominal bitrate, you get about the same size files, which sound somewhat better.” The former behavior is the aim of the quality metric, so encoding to a target bitrate is now officially deprecated for all uses except streaming over bandwidth-critical connections.
For now, quality 0 is roughly equivalent to 64kbps average, 5 is roughly 160kbps, and 10 gives about 400kbps. Most people seeking very-near-CD-quality audio encode at a quality of 5 or, for lossless stereo coupling, 6. The default setting is quality 3, which at approximately 110kbps gives a smaller filesize and significantly better fidelity than .mp3 compression at 128kbps.
As always, if you need CD-quality sound, neither Vorbis nor MP3 (nor any other lossy audio codec) can provide exact reproduction; instead, consider using a lossless audio compression scheme like FLAC.