There was a thread recently, where they thought the copies actually sounded "better". (CDR's don't use aluminum as the substrate, it's a photosensitive chemical layer). I don't think there are any simple answers to your questions! It's definitely not as simple as reading "either ones or zeros", either..........................Peruse The Complete Guide to Highend Audio, familiarize yourself with the finer points, and then e-mail a few high end digital manufacturers for their thoughts on this (but don't ask dumb questions, and don't hound them too much).
CD Copies...why do they sound worse?
I had a theory that I haven't discarded yet that not all CD blanks are equal in terms of composition. Yes, they all are made of aluminum and polycarbonate, and when you burn a CD you are creating small holes, or dents in the blank. There is the red book standard that must be adhered to, but as in anything else, I'm sure there are better grades of aluminum and poly available, you get what you pay for. Since the laser reads the digital stream by optically scanning the surface of the CD and interpreting either a one or zero, you'd think it's a go/no-go operation. The original and copies do not sound the same, even to the uncritical ear. I thought for a while it may have had something to do with the relative quality of the CD blanks I was using to copy, in other words, the pressing plants simply use a better grade of master CD's. My friend has a contact and we were able to acquire bulk CD blanks from Saturn Disc that makes CD's. No difference, copies still aren't right. I guess we can eliminate the CD blanks for now. Here's where things get a little outside normal thinking in my twisted logic: we know there are error detection and correction schemes used in intrepreting the data on the CD, employed when the bit being read isn't immediately recognizable to the player. Is it possible the home-made copy that was burned using a cheap consumer grade burner, contains more errors? Are the pits burnt in the CD either irregular in shape or depth? Does the laser in these consumer grade CD burner introduce errors? If so, the EDAC is pretty busy, and doesn't always get it right, which would explain a general lack of quality due to latency delays in the data stream while the EDAC does it's work, and in the process is bound to mis-interpret zeros and ones, there is no 100% accurate EDAC. To me, this is a good place to start in terms of understanding the obvious differences in sound quality.