[amluto]

…if competently encoded.

You can absolutely hear the difference between a bad MP3 and the original. I used to amuse myself and friends by quite reliably identifying the difference, blinded, using a rather bad pair of speakers.

Actual CD audio can also work quite differently than any encoding, as at least older CD drives had an entirely separate analog output cable that connected to the sound card and bypassed the ATAPI link entirely. Levels wouldn’t even be matched.