Complex sentence: It achieves lossless data compression, and is backwards compatible with the MP3 format by storing two data streams in one file: one holding the lossless version of the audio, the other containing the standard MP3 data.
Split into simpler sentences: It achieves lossless data compression and is backwards compatible with the MP3 format by storing two data streams in one file. One holding the lossless version of the audio, the other the contains the standard mp3 data.