One of the areas that I had purposely failed to cover was Filters. Filters are an interesting topic altogether. My technical knowledge about filters again is very minimal but I will try to explain what they do with whatever info I have.

Filters in simple terms are algorithms that convert encoded data back to their original form. For instance, while creating a new PDF file that contains my speech, I might have encoded (changed) my speech to a bunch of characters that make no sense but save a lot of space and thus reduce the size of my PDF file. When I send this file to a friend and he/she tries to open it using say PDFBox, the program will have to use a specific filter to decode (change back to the original form) my speech back to its original form - with no loss whatsoever. 

It is not necessary to understand how each of these filters work but I am making an attempt to understand them. I will update as I keep learning. Meanwhile refer to the link http://www.adobe.com/devnet/acrobat/pdfs/PDF32000_2008.pdf for more details (Page 22 onwards).