To answer your question, S/PDIF is a specific digital communication protocol to encode and transfer 2-channel PCM music data as well as multi-channel Dolby Digital and DTS data. Technically speaking, any wire can be used to connect an S/PDIF source to a S/PDIF target/receiver. However, COAX cables are mostly recommended because of their shielding (which is critical on a S/PDIF cable) and the ability to try to adhere to the 75 ohm requirement for S/PDIF transmitter/receiver specification. In reality, only COAX cables properly terminated with a 75 ohm BNC connector will match this criteria. Cables that are terminated with RCA generally have a lower impedance (I think it was somewhere around 24 ohms or so).
There are a couple of other mechanisms that have been created to transfer this same S/PDIF data:
toslink - a glass/fiber cable which uses light pulses to transmit the S/PDIF data instead of electrical pulses. Like others have said, it electrically disconnects the source/target so that there is no ground loop hum transmitted. The downside is that it's not a perfect transfer medium because the LEDs (light emitting diodes) just cannot light up fast enough to create a perfect square wave. The result is almost a curvy sine wave. Sound quality is not going to be as good as a high quality COAX.
AES/EBU - uses an XLR cable that should be engineered to have 110 ohm impedance. The digital pulses are exactly the same as digital COAX, except they are balanced. One conductor of the XLR transmits a positive square wave, and the other conductor transmits a negative square wave. Generally, both of these conductors are connected to the primary wires of a small transformer on the target/receiver (one conductor pushes voltage while the other conductor pulls voltage). Theoretically speaking, you could take the positive conductor and just connect it into a standard digital COAX input (because the signal is exactly the same).
There are a couple of other mechanisms that have been created to transfer this same S/PDIF data:
toslink - a glass/fiber cable which uses light pulses to transmit the S/PDIF data instead of electrical pulses. Like others have said, it electrically disconnects the source/target so that there is no ground loop hum transmitted. The downside is that it's not a perfect transfer medium because the LEDs (light emitting diodes) just cannot light up fast enough to create a perfect square wave. The result is almost a curvy sine wave. Sound quality is not going to be as good as a high quality COAX.
AES/EBU - uses an XLR cable that should be engineered to have 110 ohm impedance. The digital pulses are exactly the same as digital COAX, except they are balanced. One conductor of the XLR transmits a positive square wave, and the other conductor transmits a negative square wave. Generally, both of these conductors are connected to the primary wires of a small transformer on the target/receiver (one conductor pushes voltage while the other conductor pulls voltage). Theoretically speaking, you could take the positive conductor and just connect it into a standard digital COAX input (because the signal is exactly the same).